This post was written with Chris Kerlow and Craig Basinger.

The essence of money management can be encapsulated in searching for investments that are trading below their intrinsic value.

In theory, it works like this: Buying these companies low, and as the market comes around to realize their intrinsic value, the price moves higher and we sell for profits.

This is the activity of price discovery and makes for a healthy market as participants buy and sell in the attempt to profit from the return to intrinsic value, see chart. But there is a new big player in the market that doesnt care about price discovery, the Exchange Traded Fund (ETF) or other passive index investment strategies. A passive ETF is price agnostic. They need to buy the shares of the underlying basket of stocks that comprise the index, regardless of the price of those stocks. Their mandate is not to buy low, sell high; it is to buy quickly, minimizing tracking error, giving investors the exact exposure they are looking for. Most indices are based on market weight, and do not discriminate for liquidity.

With ETFs swelling in assets and active managers shrinking over the past years, the number of participants embarking upon the admirable task of price discovery is lower. All else equal, this suggests it will likely take longer for the true intrinsic value to be found. Meaning that the Warren Buffet style investors will need to wait longer for the tide to go out and show who is swimming naked, as the oracle from Omaha eloquently once said. This could be one of the reasons why active management has lagged for the past several years, as the bull market marches higher and passive funds pile more and more capital into the fastest growing stocks, with no regard to price or value.

Active managers typically classify their style into specific architypes. Value investors buy beaten down companies that are believed to have a larger gap between the current price and intrinsic value. Growth managers buy at higher levels, thinking that the market is underestimating the growth prospects. Top down managers make macro bets, focusing on sector allocation and picking the best solution to portray their view. Or, a manager might focus on specific factors like large cap, dividend companies which narrows their focus and inherently investment outcomes.

All things considered, most managers use a varying combination of different approaches. All are buying companies they believe to be below intrinsic value and selling those at or above intrinsic value. But with a weaker price discovery mechanism in the market, perhaps it is time for active managers to change their approach. We believe active managers can add the most value when the market is inefficient see chart below. And inefficiencies are often caused by human behavior.

Where do these inefficiencies stem from? The innate human behaviors that have helped us survive and work our way to the top of the food chain also come with flaws that are exhibited in investing. We are accumulating a variety of research on these biases and looking for investing opportunities that these repeating tendencies present. We will highlight several of these behavioral biases to help our readers try to avoid them in their own portfolios and potentially profit from taking advantage of others irrational behaviors.

Overreaction

Markets are largely efficient, some more than others, but it is undeniable that inefficiencies are present. Some inefficiencies take time to rectify themselves and some come and go quickly. These aberrations are highlighted by the markets reaction to earnings and brief periods of extreme volatility (flash crashes).

As an example, during the May 2010 flash crash, we saw the U.S. market lose a trillion dollars of market cap in 36 minutes, only to rebound quickly thereafter. It would be interesting to hear Eugene Fama explain how that is a characteristic of an efficient market. Regulations were put in place to avoid such an event from occurring again (LULD) but they proved to be inadequate. On August 24, 2015 we experienced another flash crash with many ETFs becoming unhinged from their implied value. The limit up, limit down (LULD) regulations put in place during the previous flash crash exacerbated the problem as market markers of ETFs were uncertain of the true value of the basket that investors were trying to buy / sell, so the market makers vanished.

We vividly remember sitting at our desks that Monday morning as the Dow fell 1,000 in just minutes. What caught our attention more than the massive fall in stock prices, was the dislocation between sector ETFs and the basket of stocks they were built to follow. IAK, the iShares insurance ETF was down 42% in the first 12 minutes of trading, while at the same time the largest underlying constituents like AIG and MetLife were down only 10%. The market makers had seemingly disappeared. Everything did come back to reality just a short while later as the ETF rallied 68% off the lows, as shown on the chart below.

Although this exact scenario may not happen again, over reaction to new information will. This stems from the availability heuristic where investors focus on the most recent information often ignoring the long term picture. Our Market Ethos on Earnings Overreaction, goes into detail on how high quality companies that see a share price slammed on a negative earnings report tend to make back the share price loss quickly, while low quality companies that gap up on earnings tend to give back the gains.

Confirmation Bias and Herding

Two weeks ago we wrote about the flaws in investing with the herd. Our innate tendency to follow the herd has been ingrained in us through Darwinism and is glaringly obvious in investing, but often ends poorly, especially for those late to the party. The next chart exemplifies what we are referring to. You can see when the herd, in this case speculators on the Canadian dollar, gets to extreme levels, it has been the exact time the momentum shifts in the other direction. Adding to this problem is a confirmation bias, when investors place more value on information that corroborates with their own opinion. The flaws are simply human nature and unlikely to go away anytime soon.

Understanding that, if you are able to get in early before the herd follows, you should be able to make some nice profits. To do so, you need to take a contrarian view, which conflicts with the comforting feelings you get from going with the herd. Back in April, we published a piece that outlined a strategy to take advantage of these biases. Best to be Unloved goes into greater detail but the idea is simple: companies that are largely unloved by the analyst community, but then start to get upgraded, have seen outsized gains versus companies that have mainly buy ratings, last chart. The premise is rather simple, these unloved companies could have depressed valuations because they do not have the herd supporting the stock. Then as analysts start to recognize a change in business fundamentals, they upgrade the stock. Often other analysts follow their peers, subsequently upgrading their rating of the stock. More upgrades tend to follow, giving investors confirmation and feeding the herding behaviour.

Conclusion

These are just a couple of examples of how our hardwired heuristics and bias show up in investment decisions. We are engulfed in the subject matter as we continue to research behavioral finance to help avoid pitfalls in our own investment process as well as find ways of exploiting these repeated flaws exhibited in the broad market. We look forward to sharing the findings with you, our readers, to help you avoid making behavioral mistakes.

Charts are sourced to Bloomberg unless otherwise noted.

Twitter:@sobata416 @ConnectedWealth

Any opinions expressed herein are solely those of the authors, and do not in any way represent the views or opinions of any other person or entity.

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Uncovering Value: Price Discovery And Irrational Investing Behavior - See It Market (blog)

While Donald Trumps mighty guns of August are locked and loaded, this piece will try to revive the protracted duel between reason and emotion.

Its a debate that never dies: What defines and animates humanity? Is it calculating reason that invented the tools and amenities of civilization, or what the painter Vincent van Gogh called the terrible passions that drove us to where we are now?

If we survey the events of history all the way to that fateful day a wily serpent tempted an innocent Eve to eat the forbidden fruit in the Garden of Eden, it is undoubtedly the passions that largely rule our behavior. Rationalists may declare with certitude the unstoppable, onward march of reason to the omega of human evolution, but immortal myths and facts on the ground tell a more convincing story of an untamable animal spirit that drives human thought and action: the lust for adventure, the inordinate appetite for fighting, hurting, and dominating others in short, the desire for mate, love, revenge, power and glory.

Think of the wars, great and small, that have been fought because of matters of emotional fury. Think of the mythical thousand ships launched by the Greeks to bring back the beautiful Helen from the arms of Paris in Troy; think of the mesmerizing beauty of the Taj Mahal built by the grieving emperor Shah Jahan as a mausoleum for his beloved wife Mumtaz; recall the hundreds of millions of people who lost their lives in numberless killing fields throughout the world; and more recently, dance to the irresistible beat of Despacito which briefly united us in over four billion views. Finally, think of the staying power of the great religions of humankind, and you get some insights into human passions in all their mystery, splendor and savagery.

Sadly, the marvels of science and cybertechnologies that have reduced Earth to a small village of competing tribes have not freed humanity from its Neanderthal moorings. As in the past, its swords, guns and bombs, not plowshares and classrooms, that make the difference.

And so, unsurprisingly, we find lunatic nations like North Korea, enamored of their newfound nuclear toys, and great powers like China and America, playing out their existential imperatives on the world stage, while a fearful humanity holds its breath, knowing that any miscalculation could lead to nuclear war and global catastrophe.

Is reason really impotent when besieged by the passions? If there is one big lesson to be learned from human frailty, its that we have not learned from history. Barbara Tuchman inferred in her classic The March of Folly that governments throughout millennia have never learned how to tame the passions. Thus, since governments advent in 2000 B.C., there has been no marked improvement in it as an instrument for the rational and just management of human society. And if we cannot learn from our mistakes (follies), we are certainly doomed to repeat them.

Serious students of human behavior conclude that while the sciences have progressed by leaps and bounds, government has been at a standstill no better conducted now than 4,000 years ago.

David Hume believes that reason is and ought to be the slave of the passions and can never pretend to any other office than to serve and obey them. Translation: Passions, not the cold logic of reason, motivate human action. Thus, in our world of dizzying technological developments, beware of the many disguises of the passions used by those in power to make their lies appear palatable and reasonable.

In the Philippine context, that could mean that propaganda its arsenal of alternative facts, half-truths, and post-truth that flood social media actually speaks the language of reason even when its aim is to fool people because its authors know that their real target is the passions. Thats what makes it so dangerous to a gullible, undiscerning public.

If there is a moral to this piece, it is that we must realize we live in a maddening world where real truth is often stranger than fiction; that in a larger sense, the conflict between the passions and reason has barely begun. The passions and reason are what make us uniquely human. They are inseparable and need each other, for good or ill.

* * *

Narciso Reyes Jr. (ngreyes1640@hotmail.com) is an international book author and former diplomat. He lived in Beijing in 1978-81 as bureau chief of the Philippine News Agency.

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Taming 'the terrible passions' - Inquirer.net

The seven helium-filled white globes that hover, swarm, and form kaleidoscopic patterns above visitors to Londons Roundhouse are neither friend nor foetheyre inanimate drones programmed by an algorithm to move, and to respond in turn to the various movements of people below them. And yet their behavior is familiarly, unsettlingly alive. They seem curious at some points, breaking away from their pack to investigate individuals on the ground. Theyre menacing at others, gliding gracefully into imposing structures overhead. Theyre sometimes clumsy, colliding with each other and veering awkwardly upward. And theyre mesmerizing, evoking entities as disparate as birds and bacteria in the ways they gently dance and dip under the Roundhouses domed ceiling.

The balloon-drones are Zoological, a flock of autonomous, flying spheres created for the installation +/- Human by the studio Random International, the artists best known for Rain Room. That work, which debuted at Londons Barbican in 2012, helped usher in a new age of Instagram-friendly immersive artworks, attracting day-long lines when it moved to New Yorks Museum of Modern Art prior to a 15-month stint at the Los Angeles County Museum of Art. But where Rain Room allowed visitors to feel omnipotent, walking freely through a room of falling water without getting wet, Zoological encourages a sense of vulnerability. The ever-shifting constellations overhead are beautiful and unsettling: They catalog and respond to human behavior. This is an artwork that you observe while aware that its observing you right back.

Art for Instagrams Sake

+/- Human includes dance performances choreographed by Wayne McGregor, devised to provoke and create new patterns of movement as the dancers and the spheres interact. During the day, visitors can simply enter the Roundhouses space and move around underneath Zoological, which is accompanied by original music composed by Warp Recordss Mark Pritchard. The score is pivotal, offering ethereal layers of electronic harmonies, and then jarring, discordant sounds of exaggerated humming or screeching. At times the room feels like a scene from Denis Villeneuves Arrival; at others like a particularly traumatic episode of Black Mirror. The drones are benign, staying out of arms reach, but their behaviorboth pre-programmed and responsiveis impossible to predict.

Zoological, as a work, seems intended to play on subconscious anxieties about everything from driverless cars to alien invasions to mutating pathogens. The ways in which the spheres rise and fall around each other mimic the ways birds fly, and bugs swarm, and computers generate graphics that move to music. Its eerily familiar, but inhuman. Random International describes the work as an amplified and physical manifestation of our lived experience in a world increasingly run by algorithms, and its rendering of our uncertain, symbiotic, increasingly dependent relationship with machines and code captures the flux of an era in which technology is evolving faster than our ability to devise ethical frameworks for it. The spheres in Zoological are harmless, but for how long?

Its perhaps less instantly gratifying and joyful than Rain Room, but much more thought-provoking. Its also of a piece with other recent works of art and entertainment that try to wrestle with how drones are changing the nature of warfare or how technology will ruin humanity if were not perpetually vigilant. Its a theme Random International has considered over and over, in a series of Swarm Studies that examine and mimic collective behavior, and in works that reflect the human form in motion as pinpricks of light. Zoological, fascinating and occasionally alarming, encourages engagement, but the underlying note is one of caution.

See the rest here:
The Follow-Up to Rain Room Is Brilliant and Unsettling - The Atlantic

With the spectacular success of Hamilton, musical theater has moved from a niche market to the national stage in recent years. And for good reason the impact of Hamilton has has reached far beyond the entertainment world, spanning culture in general, rap, education and even Congress. Among other things, it has shown that musical theater can offer a fresh, exciting way to learn about history and culture, and it can offer much more than that even to those who dont aspire to perform on Broadway.

Indeed, musical theater is a powerful art form that can transform the lives of those who take part, but its power is often overlooked. Now is the time to pull the curtain back.

Reams of statistics show that learning a musical instrument can lead to a whole host of benefits, from improved discipline, perseverance and collaboration to enhanced cognitive skills and positive neurological effects. While these benefits are beyond dispute, its worth considering that musical theater mostly left out of conversations like this expand upon them.

Among other life lessons and traits, musical theater can teach and foster these important skills:

1) A deeper understanding of human behavior and psychology: Researchers have argued that psychologists can look to how actors create emotions to understand human nature in a new way. Thats because a performer must understand others actions and the meanings behind them to convincingly portray another character, environment and tone on stage. In doing this, they conversely learn to identify their own innate biases and practice empathy when interacting with the people around them.

2) A sense of ownership and independence: In a theater production, theres no sitting on the sidelines! Theres only one person for each role and a small margin for error, so performers must learn to work independently and arrive prepared. They are expected to pull their own weight and sometimes even more -- to produce the best show possible.

3) Creative thinking and problem-solving skills: Anyone partaking in a production is involved in the business of creation whether its building scenery, a script, a costume, props, and so on. On stage, performers create characters, moods and settings. They must also use problem-solving skills to decide how a character will react, what decisions they will make, and how their actions will help tell the story.

4) How to give and take feedback effectively: Giving and receiving constructive feedback is a regular part of any form of theater. Performers understand that feedback is a useful part of the learning process and how to channel it into success. At the same time, they are also challenged to give feedback to their peers that is respectful and useful. Critical thinking and listening are just as an important piece of the puzzle as performing on stage.

5) The importance of teamwork and the unique value that every individual brings: Musical theater is arguably the most collaborative form of creative expression. It takes a range of people writers, actors, designers, directors, choreographers, and more to put together a successful performance. Performers cant get on stage without the help of the off-stage crew; what happens behind the scenes is just as important as what happens when the curtain rises. Theater demands that anyone working on a project is an important part of the show the final product can never be completed unless every team member is working toward the same goal.

As executive director of Kaufman Music Center in New York City, Ive seen this first-hand at the organizations annual Summer Theater Musical Workshop, where young people of all backgrounds and interests learn to shine on stage. The workshop is primarily for kids with various interests, not just for those who want to spend their lives professionally on stage. For those who may already be instrumentalists, musical theater takes them further, allowing them to express their musical talent through their own body. It helps the shy or quiet child come out of his/her shell and boost confidence, and has been known to turn the class clown into a real star. For many people, theres something about singing with a group, working with others to pull off a number and flexing many different talents singing, dancing, acting, writing thats stimulating, moving, motivational, fun and inspirational. At the same time, it leads to a mastery of stage presence a boon for any musician, attorney, physician, teacher and the list goes on!

For an experience that will have a long-lasting and potentially life-changing impact, everyone and anyone should take part in musical theater. You might be surprised at the result, and have a lot of fun as well.

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Kids & Musical Theater: The Off-Stage Impact - HuffPost

Due to our earlier ancestors tribal rivalries, slavery, racism, segregation, oppressive issues, and racial profiling, Black people have yet to heal their Black wounds. Post Traumatic Slave Syndrome is something that has impacted the Black race for many years to come. We have yet to heal those color complex wounds, and progress beyond it. Due to the Willie Lynch Syndrome, colorism, ageism, educational status, social economic status has created division within the Black race. With so many nationalities, groups, organizations, and running circles, Black people have learned to stay divided, verses working together in unison, while still respecting one anothers differences.

Due to our Post-Traumatic Slave Syndrome, Black people need help to heal their wounds. Understanding the psychology of behavior and embracing the need for therapy could be helpful, except Black people have yet to respect therapy nor psychology. Due to syphilis studies completed on Black people, injustices with the judicial system and Black people being used as guinea pigs by white America, Black people have learned to distrust psychology, believing it's some sort of hocus pocus. Psychology is something Black people also do not trust, due to Pre- conceived notions about the field. Although many people of all races have misconceptions about the field of psychology, many Black people view Psychology as a form of mind manipulation, mind trickery and a way to control or mess with someones head. They also believe it is a White man's science that can only benefit the White race. When many Black people think of psychology, they have visions of Freud, White men, and hypnotherapy. People who misunderstand psychology have little to no understanding that, it is a science which studies human behavior, social influence and animal behavior. Psychology bases its studies on empirical evidence. Psychology is the study of the brain and mind and how earlier experiences, forming core beliefs effect present situations. Psychology is a healing field, designed to treat and diagnose those with psychopathology and or help people with normal stress. There are also different fields in psychology, like, Clinical Psychology; Neuro Psychology; Social Psychology; Forensic Psychology; Human Factors; Applied Behavioral Analysis etc Due to people being experts at being a human and having a great understanding of their self, their friends and family, they believe they have psychology nipped in the bud, without considering the fact of their own biases, transference issues, projections, which cloud their objectivity. These differences are what separates the field of psychology as a scientifically based field, versus normal populations with pre-conceived notions about the field of psychology.

Many people assume the field of psychology can be summed up with two theorists, Sigmund Freud and Carl Jung. Although both are two important figures in psychology, Sigmund Freud and Carl Jung were founding members of psychoanalysis. They did not begin the field of psychology. Many theorists in psychology exist and theorists continue to evolve. Psychology is ubiquitous and it is the study of people. Psychology began the moment humans were created. The moment Lucy, aka The Real Eve was created to be the mother of civilization, psychology begin to unfold then. The field was created to help bring an understanding to human behavior.

Psychology can help heal Black people. Due to many Black people lacking proper communication styles within their family systems, etc those attachment styles carry into their friendships and relationships. Many Black people would rather curse one another out and use defense mechanisms to cover their wounds. The proper psychology has not been learned to communicate pain in a healthy way. The average Black person will go from hurt, to combat in a matter of seconds, without understanding the neurotic vicious cycles which are created when one assumes something of another and projects that expectation, which triggers reactions in others. Black people have learned how to talk to one another harshly and use defense mechanisms to repair broken egos and narcissistic injury. Black people have even learned how to use retorts that appear cool so that humor makes up for hurtful situations (Laughing to keep from crying). The average Black person would rather trade wise cracks with one another, verses using healthy psychology and proper communication to hurt feelings. Respect is a huge thing one demands but never gives. Black people have yet to be apologized to by racist people, society nor the members in their family, significant others and friends that have hurt them. Therefore, they are unapologetic. Lacking empathy is a familiar trait in the Black race, because it is considered weak to show feelings. Anger is accepted but showing emotion is rejected. Whenever Black people show empathy, it must appear cool and be accepted by the race. For example, "RIP to all my n*****" or "Where i come from, it goes from respect, disrespect, total disrespect to eff everybody". Both examples communicate emotional pain, but it is communicated in a "I'm so cool and will not show weakness" kind of way. Many Black people have experienced harsh treatment and compassionless from outsiders, members in their own families, relationships and friendships, therefore, they have not learned to control their impulses nor empathize with those they harm. Hurt people are conditioned to hurt others. Instead of hiding behind narcissism, defense mechanisms, unconscious conflict, mommy and daddy issues and developing unhealthy relationship patterns, learn to embrace psychology healing you from dysfunctional behavior.

Black people are the mother and father of all races and they are strong and resilient, therefore, they have learned how to push forward in life and continue moving and living with hurt. Since slavery Black people have been mistreated and have not learned how to deal with their wounds and unconscious conflict. Transference is a form of earlier childhood experiences being projected onto new objects, for example, people, places and things. A good example is, someone who might be attracted to certain people, rather good or bad because they are familiar spirits, with characteristics of their earlier experiences. Transference shows up in many of the things we choose in life, from friendships, relationships, jobs, places etc. A woman who was abandoned by her mother or father may choose men or women in her life who are emotionally unavailable or unsupportive during the most important moments. A woman who wasn't raised with her father may have unresolved daddy issues, while men who were also not raised with their father have a need to be a woman's daddy, to make up for their loss manhood. The decisions we make are mostly unconscious, so this information may be rejected consciously because the intellectual mind does not understand why they would choose people who remind them of the disappointments of their earlier experiences, but the unconscious mind chooses people and situations to work through the conflict. The Black woman choosing men who will not father her children, consequently playing both the mother and father in her household has been common since the early 70s. The Black man missing from the household has also been common since the early 70s. Although some Black people were raised with both parents, many broken homes in the Black race exists. Due to this family dysfunction, many members within the Black race are choosing the wrong people and making many wrong decisions, because they have not worked through their transference issues. You will find many men who are misogynistic or disrespectful towards women because they have issues with their mother and they never saw a man love their mother properly, therefore, they grow up to be just as unloving and hateful until they become healed. We usually learn from and repeat what we see and experience. According to Melanie Klein, children learn about love from watching their parents. They repeat what they see and do not see in their relationships and friendships.

Psychology can help heal Black wounds. Dr. Joy DeGruy and Dr. Umar Johnson are both Black scholars who discuss the Black condition today.

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Healing Black People - HuffPost

People of all faith leanings, including non-believers,are apparently in general agreement on their shared distrust of atheists.

A new study published Monday in the academic journal Nature Human Behaviourfound that people around the world are more likely to believe that atheists are capable of committing extreme moral violations than people who are religious.

The results show that across the world, religious belief is intuitively viewed as a necessary safeguard against the temptations of grossly immoral conduct, and atheists are broadly perceived as potentially morally depraved and dangerous,wrote a team of international researchers.

In other words, the researchers added,people perceive belief in a god as a sufficient moral buffer to inhibit immoral behavior.

The study surveyed more than 3,000 people in 13 countries, spanning five continents. The researchers included people from both highly secular societies, like China and the Netherlands, and highly religious ones, like the United Arab Emirates and India in the study. Altogether the countries represented populations that were predominantly Christian, Muslim, Hindu, Buddhist or secular.

For the study, researchers asked participants to read a description of a fictional man who tortured animals as a child and grew up to become a teacher who murders and mutilates five homeless people. Half of the group were asked about the likelihood the perpetrator was a religious believer, while the other half were asked how likely he was an atheist.

The study found that the participants were about twice as likely to say the killer was probably atheist than to say he was religious. Researchers found these results to be true even in largely secular countries, like Australia, China, the Czech Republic, the Netherlands and the United Kingdom.

I suspect that this stems from the prevalence of deeply entrenched pro-religious norms, Will Gervais, a psychology professor at the University of Kentucky in Lexington and one of the co-authors on the study, told AFP. Even in places that are currently quite overtly secular, people still seem to intuitively hold on to the belief that religion is a moral safeguard.

And lest we assumed such attitudes hold only in cases of extreme immorality, such as murder, the researchers conducted several supplementary studies that show the opposite.

In one supplementary study, the researchers tested for lesser moral violations in this case, not paying a dinner bill and participants still associated immorality more with atheists than with believers.

Another supplementary study investigated whether people would more frequently associate certain acts of immoral behavior, such as child molestation, with religious individuals, given recent scandals of that nature regarding Catholic clergy.The researchers found that people intuitively assume that a priest who molests young boys for decades is more likely to be a priest who does not believe in God than a priest who does believe in God, the study stated.

The study echoes the findings of a report by Pew Research Center, published in 2014, which found that majorities in 22 countries say a person must believe in God in order to be moral and have good values.

Though widespread, the belief that religiosity is a necessary component of morality isnt generally supported by science. Studies show that moral qualities like empathy and prosocial behavior may predate the development of religion in human evolution and are representative of biological adaptation.

What sets people of faith apart where morality is concerned, says prominent Humanist and former evangelical Christian Bart Campolo, is a shared language of what goodness means.

Whether or not our supernaturalist brothers and sisters actually love one another, care for those in need, or cultivate genuine gratitude for the privilege of human consciousness, theyve got loads of sacred texts, theological arguments and inspirational music which clearly communicate why and how they mean to do so, Campolo, a secular chaplain at the University of Southern California, told HuffPost.

He added that studies showing the pervasive distrust toward atheists should be a wake-up call for non-believers.

We secularists, who pursue goodness simply because we recognize it as the surest way to flourish, need to get a whole lot better at compellingly articulating our own good news, and maybe even learn to make it sing, he said.

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Anti-Atheist Prejudice Is Entrenched Around The Globe, Even Among Atheists - HuffPost

You may have guessed that Im a bit of a freak when it comes to personal finance. Only a freak would get up at 5:30 a.m. on a Saturday to write about money. Right?

Given that, it shouldnt surprise you that Freakonomics (www.freakonomics.com) is one of my favorite podcasts. Freakonomics explores the hidden side of human behavior and how we make decisions behavioral economics through stories and interviews.

A recent episode, called The Stupidest Thing You Can Do With Money, grabbed my attention.

The show addresses two options for investing:

1. Hire an investment adviser, who studies the financial markets using sophisticated tools and actively manages your money to get you the best return.

2. Do-it-yourself investing passively invest with a set-it-and-forget-it attitude.

Investment advisers give their clients advice about where and how to invest, charging fees either as a percentage of assets under management, typically 1 to 2 percent, or a flat amount. There are about 300,000 investment advisers in the United States. Most of them must beat the market, right? Why else would we keep paying them?

The truth is most people are paying fees to their investment advisers for sub-par returns on their investments. Ninety-five percent of actively managed portfolios cant consistently beat the S&P 500 index after subtracting fees.

An S&P 500 index fund is a low-cost way to own a diversified portfolio. The fund owns stocks in 500 of the largest U.S. companies the S&P 500, which spans many different industries and accounts for about three-fourths of the U.S. stock markets value.

And its not just your investment adviser who cant beat the market. Harvard University has an endowment of $38 billion and access to some of the best and brightest minds and top computer-modeling tools. Yet, the universitys annualized net return on investment for the past 10 years was less than 6 percent. The S&P 500 earned 7.72 percent over the same period.

Welcome to the low-cost, index fund investing DIY revolution. Not only are low-cost mutual funds, such as S&P 500 index funds and total stock market index funds, beating actively managed portfolios, they are doing it at a lower cost.

Jack Bogle, founder of Vanguard and the worlds first index fund, says this about fees: If the market return is 7 percent and the active manager gives you 5 after that 2 percent cost, and the index fund gives you 6.96 after that four basis point cost you dont appreciate it much in a year but over 50 years, believe it or not, a dollar invested at 7 percent grows to around $32 and a dollar invested at 5 percent grows to about $10.

Its time to join the revolution.

Durango resident and personal finance coach Matt Kelly owns Momentum: Personal Finance. http://www.personalfinancecoaching.com.

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The stupidest thing you can do with money - The Durango Herald

The weekend is here! Pour yourself a mug ofTrader Joe'sOrganic Fair Trade Sumatracoffee, grab a seat by the window waiting for the skies to clear, and get ready for our longer-formweekendreads:

Be sure to check out ourMasters in Businessinterviewthis weekendwithMatt Wallaert, a behavioral scientist and former director at Microsoft Ventures who works at the intersection oftechnology and human behavior.

Want to receive our daily reads in your inbox? Sign uphere!

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.net

To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net

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Money Problems and Millionaires - Bloomberg

August 11, 2017

The Texas Legislature's just-ended 85th session included bills that allow religion-based exemptions to certain laws, leading some to wonder how the term "sincerely held religious beliefs" is defined. Ultimately, we rely far more on general cultural norms as to what we wish to tolerate at a given time.

The Texas Legislature's just-ended 85th session included bills that...

Outmoded ideas

Regarding letter to the editor "Christian faith" (Page A13, Tuesday), no one is asking the Rev. F.N. Williams to abandon his apparently fervently-held beliefs; he's just being asked to not use them as a reason to discriminate against people who don't meet his rigid standards for "appropriate" behavior, including transgender folks.

As for showing your birth certificate before being allowed to use the restroom; who's going to enforce that? As far as I know, there is no Department of Potty Police, nor should there be. Rev. Williams, you are not being "classed" as a bigot because, as you state, "I will not allow transgenders....to change my faith and practices." You are being classed as a bigot because you fail to see the difference between belief and behavior. Beliefs are simply that: beliefs. They should not be used as WMDs because you disagree with another person's behavior. The reverend's narrow concept of human behavior is a dangerous precursor to imposing disconnected standards of behavior to outmoded ideas.

Neal Massey, Houston

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Life choices

Rev. Williams states "The highest law of the land is God's law; not national, not state, not local laws..."

Believers of all faiths will agree that ultimately, God's law is supreme. However, because our varying faiths understand God's laws differently, it is left to our nation of men and women to create laws that recognize that diversity in our faith traditions. It is up to each individual to follow their own religious teachings about God's law in his or her own life choices and actions; however, it is up to our government to protect each individual's rights regarding those choices and actions.

Nancy Pryzant Picus, Houston

Secular laws rule

The highest law of this land is the U.S. Constitution. As the United States is a democratic republic, I do not have to follow any religious laws (Christian, Judaic, Islamic or any other faith) unless I subscribe to that faith and its tenets. On the other hand, I must obey all the secular laws (federal, state or local - whichever jurisdiction applies to me) or I can be sanctioned. No such sanctions can be imposed on me should I not following some specific religious law. This country is not now, nor has ever been, a theocracy.

Len Denney, Houston

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Saturday letters: Different beliefs - Houston Chronicle

MILWAUKEE, WI Just how does an elephant walk? Thats one of the questions the staff at the Milwaukee County Zoo will answer during the Saturday, Aug. 2, observance of World Elephant Day, a day set aside to raise awareness of the soul-crushing plight of elephants in the wild.

The Milwaukee Zoo activities take place from 11 a.m-1 p.m. Besides trying to walk like an elephant and pick up food with their trunks, visitors will also be able to tour the elephants night quarters and learn more about their lives.

Sentient, gentle elephants lead rich emotional lives with values similar to humans, but have been driven to the brink of extinction by habitat destruction for cash crops and, more jarring, hunters who mercilessly rip out their ivory tusks while theyre still alive, then leave them to die excruciating, slow deaths from hemorrhage.

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Conservationists warn that at the rate elephants are disappearing, their species could be wiped out in Asia and Africa with 12 years. Asian elephants number only about 40,000 and are classified as endangered on the IUCN Red List of Threatened Species. There are about 400,000 remaining in Africa, where they are classified as vulnerable.

A focus of the Milwaukee Zoo event will be to add more signatures to a petition for an ivory ban in Wisconsin. Last year, new rules announced by the Obama administration were a near-complete ban on the multi-billion-dollar ivory trade.

The rules outlawed ivory imports but had some exceptions for example, ivory legally imported before 1990, old ivory that is more than 100 years old, and ivory used in gun handles and musical instruments. Those rules prevent the trade of ivory between states but dont regulate the ivory trade in individual states.

Seven states have now added an extra layer of protection, and elephant advocates in a handful of others, including Wisconsin, are asking for similar legislation.

Ninety-six elephants die every day in Africa because of poaching, Milwaukee Zoo spokeswoman Jennifer Diliberti-Shea told Patch earlier this year, adding that the United States is one of the leading destinations for ivory imports. At that rate, an elephant dies every 15 minutes. Theyre dying at a higher rate than new calves are born the gestation period is 22 months and if the trend continues, African elephants will become extinct within 25 years.

Here are five things you can do right now to affect elephant survival rates:

1. Dont buy ivory, and if you have ivory heirlooms sitting around the house, crush them and have a burial ceremony with your kids in the back yard. Crushing events take place on massive scales just last week, state and federal environmental and conservation officials in Albany, New York, crushed a ton of illegal ivory trinkets worth a staggering $6 million and family-centered ivory disposals can help kids connect with a species that demonstrate what we consider the finest human traits: empathy, self-awareness and social intelligence, Vanity Fair Editor Graydon Carter said, adding: But the way we treat them puts on display the very worst of human behavior.

2. Support one of 10 elephant conservation projects in critical landscapes through The Bodhi Tree Foundations Power of 10 initiative. Each of the projects focuses on countering the forces that threaten elephants poaching, habitat loss, human-elephant conflict, and a lack of vital rehabilitation and veterinary care. Some of the projects are funded, but others are in dire need of support. The Bodhi Tree Foundation says 100 percent of donations go directly to the project of the donors choosing.

3. Be an informed consumer. Dont buy coffee that isnt fair-trade or shade-grown, and avoid products containing palm oil warning, thats going to be tough because its the most widely used vegetable oil in the world, but possible. Coffee and oil palm plantations have decimated elephant habitat. Also, make sure wood products are certified by the Forest Stewardship Council.

4. Adopt an elephant through organizations such as the World Wildlife Foundation, World Animal Foundation, Born Free and Defenders of Wildlife. Youll get pictures of your elephant, as well as the satisfaction that youre helping those organizations stop poaching and other threats to elephant survival.

5. If you want to experience elephants, be aware that many used for entertainment purposes are mistreated, sometime terribly so. Ringling Bros. and Barnum & Bailey Circus decision to retire its last working elephants reflected the publics growing understanding of elephant intelligence and distaste for activities that exploit them, and the travel website Trip Adviser is no longer booking excursions to attractions with captive animals, including elephant rides, but exploitation still happens. If youre planning on experiencing elephants in the wild, make sure you choose eco-friendly tourism options.

If you want to know more about how human behavior is altering elephant behavior, check out the fascinating read published in 2006 by The New York Times titled An Elephant Crackup?

Among the conclusions: Young male elephants are running amuck across Africa, India and Asia, goring children in villages where they once peacefully co-existed with humans, because decades of ivory poaching, habitat loss and other threats have disrupted the fabric of elephant life and the societal and familial structures under which young elephants are raised and, essentially, kept in line.

The slaughter is traumatic for young elephants and profoundly changes them, psychologist Gay Bradshaw told The Times.

The loss of elephant elders and the traumatic experience of witnessing the massacres of their family, impairs normal brain and behavior development in young elephants, said Bradshaw, who at the time was doing research for what became the Pulitzer Prize-nominated Elephants on the Edge: What Animals Teach Us about Humanity.

Photo by Ian Walton/Getty Images News/Getty Images

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Originally published August 11, 2017.

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World Elephant Day 2017: Milwaukee Zoo Steps Up Ivory Ban Drive - Patch.com