Apprise Wealth Management's Selected Readings for the Week of January 27, 2018

Personal Finance

January 28, 2019
Personal Finance

At Apprise Wealth Management, we want to help people make better decisions about money. We also read constantly and like sharing some of the commentaries we enjoyed reading the most each week.

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Here are this week’s articles as well as a brief description of each:

1.   Attention, college shoppers. These schools are slashing their prices. The cost of college tuition can be scary. There are many ways to save for college, but saving enough is hard, especially when the current cost of attending many private schools is more than $70,000 annually. Like when you buy a new car, colleges can have “sticker prices.” The Washington Post found more than 310 colleges and universities in 2016-2017 where at least 95% of the undergraduates received grants or scholarships. Interestingly, according to the National Association of Independent Colleges and Universities, an increasing number of private colleges – 23 since 2016 – have reduced tuition. Hopefully, this trend will continue.

2.   Daniel Kahneman: Your Intuition Is Wrong, Unless These 3 Conditions Are Met. Nobel Prize winner Daniel Kahneman wrote what may be the seminal work on behavioral economics – Thinking Fast and Slow. Mr. Kahneman defines intuition as “thinking that you know without knowing why you do.” Based on this definition, intuition can be right or wrong. Mr. Kahneman says three conditions need to be met in order to trust one’s intuition:

·        There must be some regularity in the world that someone can pick up and learn (an example would be chess).

·        A lot of practice

·        Immediate feedback

If those three conditions are present, we can develop expert intuition. If they are not, simply having an idea and a great deal of confidence does not guarantee accuracy. Mr. Kahneman also believes intuition will not help investors increase their rate of success.

3.   For the NFL and All of Football, a New Threat: An Evaporating Insurance MarketAre you a football fan? Excited about Sunday’s Super Bowl? As a long-time Giants fan, I have fond memories of Bill Belichick – he was a defensive coach for the first two Giant Super Bowl wins and the losing coach in the other two. However, I’ve seen enough of the Patriots. Go Rams! Football has seen many negative headlines over the last few years – acts of domestic violence committed by players and growing concerns over head trauma top the list. Increased fears about the latter are causing insurance companies to abandon ship. The NFL no longer has general liability insurance covering head trauma. Youth football leagues and some junior colleges have already shut down programs because of either higher insurance costs or the inability to obtain coverage. If youth leagues shut down, football at all levels will be materially impacted.

4.  ‘Bear Market’ Is an Arbitrary Label, but Using It Can Hurt. For about the last 30 years, a 20% market decline has generally defined a bear market. Investors this century have only seen two such declines – in 2000 and 2008. However, a bear market’s start does not mean much. While this century’s declines were far worse than 20% (both times the market fell approximately 50% from peak to trough), other times the market fell far less. For example, in 1987, the market declined only 0.4% more after tumbling 20.5% on October 19, 1987. In 1982, the market dropped only 6% more after first closing in bear market territory. In short, the mere diagnosis of a bear market does not really help us forecast how much further the market will fall.

5.   The Robot Will See You Now: The Increasing Role of Robotics in Psychiatric Care. One day it could be normal for families to bring their robot to a psychiatric clinic. Why? It could help the robot deal with the emotions it develops because of its interactions with human beings. Robots are not expected to replace physicians’ work. Instead, they will supplement it. Robots are already playing a role in caring for elderly dementia patients.

 

We hope you find the above posts of interest. If you would like to talk to us about financial topics including your investments, creating a financial plan, saving for college, or saving for your retirement please fill out our contact form, and we will be in touch. We can schedule a call, a virtual meeting via Zoom, or a meeting at Apprise Wealth Management's office in Northern Baltimore County.

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