Enduring Wealth Or A Yummy Breakfast? Asset Allocation Daily

Feb. 01, 2019 8:44 AM ET3 Comments
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SA For FAs
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Summary

  • Tipswatch: TIPS investments underperformed nominal Treasurys over the past decade.
  • Hans Hauge advises a “couple percent allocation to cryptocurrencies in their portfolio” for those who can afford the risk.
  • Thought For The Day: Today's consumer culture is at odds with a long-term perspective on financial life.

TIPS’ Lost Decade

“From an investor's viewpoint, in 2009 or 2010, it was logical to assume that inflation would continue higher than 2.1%. It was as high as 4.1% in 2007, and averaged 2.5% from 1999 to 2008. But, in reality, inflation averaged only 1.8% from 2009 to 2019. That is unexpectedly low inflation, and it means that typical TIPS investments underperformed nominal Treasurys over that period.” (Tipswatch)

Cryptocurrency

We are living in an increasingly digital world and these technologies aren't going anywhere... in the future individuals are likely to have an increasing number of choices which they can use to pay for things - and we're seeing that happen now already." (Jonathan Liss interviews Hans Hauge, SA Podcast)

Gen Xers Struggle With Spending

“A man took to Reddit this week to lay out a big problem: He makes more than $100,000, and so does his wife. They live in an area that has a low cost of living. And still, they spend their entire incomes every single month. ‘Please don’t laugh,’ the guy wrote. ‘We don’t eat caviar, no new Teslas in the garage, we don’t eat out every day, no special expenses that I can think of.’” (MarketWatch)

Thought For The Day

A new survey from Down Under defends maligned millennials against stereotypes about their supposed unastute financial management. The study (HT: robbo1802) is behind a paywall, but I can summarize as follows: On the basis of a database of 140,000 users of a financial app mainly used by millennials, combined with other sources of information, the research team explains millennial spending behavior as a rational response to the unique circumstances of the generation. For example, the smaller proportion of millennials purchasing homes compared to their predecessors is a response to higher relative home prices. The researchers are inclined to characterize millennial choices as

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SA For FAs profile picture
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GIL WEINREICH - Author of "The Mentor," a unique parable for financial advisors and those who aspire to become one. I have worked in the FA arena since 1997, and during that time, the New York State Society of CPAs twice awarded its prestigious Excellence in Financial Journalism award to me for a monthly column I wrote on business ethics. Previously, I reported on international news for Voice of America (where I was awarded a newsroom writing award) and prior to that worked as an editorial assistant at U.S. News and World Report. I live with my wife and children amidst the verdant and vibrant hills and dales of Jerusalem.

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