What I'm Reading This Memorial Day Weekend

May 26, 2017
Credit Cards, Behavioral Finance, Index Funds, Debit Cards, Current Events

I love long weekends to catch up on some reading, here’s what has my attention this week:

  • The Other Difference Between Jeans and Mutual Funds (Bloomberg); identifies reasons for Vanguard’s recent domination of the mutual fund industry: “The majority of funds are actively managed and 80 percent or more of them routinely fail to beat their benchmarks net of fees. Clearly, there’s an incredibly low probability that investors will get what they’re paying for. That realization alone doesn’t imply how much funds should charge, but less would be a good start.  
    • Chart showing mutual fund fees declining (from Bloomberg:

  • Why a U2 Concert is Better Than A New Couch (Forbes); having just seen U2 in Bay Area I can attest to this:) “My favorite discovery in the field of behavioral economics confirms what we already knew deep down, even if it contradicts “common sense”–that experiences are more valuable than stuff.” 
    • I just summarized a recent Meg Faber podcast that discussed this phenomenon and other ways to use money as tool to increase happiness.
  • Obama’s Fiduciary Rule, After A Delay, Will Go Into Effect (NY Times); requires brokers to act with a fiduciary standard when it comes to retirement investments: “New consumer protections requiring financial advisers to put their customers’ interests ahead of their own — at least when handling their retirement money — will take effect next month, putting to rest the question of whether they would be delayed further. The fate of the so-called fiduciary rule, created under the Obama administration, was called into doubt when President Trump signed an executive order seeking a review of it, prompting regulators to delay its implementation to June from April. On Tuesday, Alexander Acosta, the Labor Department secretary, said the basic principles of the rule would indeed take effect on June 9, even as his agency continues to review its finer details.”
  • Death By Amazon (Dr. Ed’s Blog; thanks to recent podcast guest, Janet Bodnar of Kiplingers, for the tip); looks at the juggernaut Amazon and all the businesses it is dominating including retail: An anchor store is one of the larger stores in a shopping mall, usually a department store or a major retail chain. Shopping malls were first developed in the 1950s. Their developers signed up large department stores to draw retail traffic that would result in visits to the smaller stores in the mall as well. The anchors usually paid heavily discounted rents. Amazon is a river in South America. It is the largest one in the world by discharge of water and the longest in length. A piranha is a freshwater fish with sharp teeth and a powerful jaw that inhabits South American rivers, including the Amazon. If you happen to fall off a riverboat steaming down the Amazon, the piranhas will pick your bones clean. Amazon is also a piranha-like corporation that eats up retailers, particularly the anchor stores, and doesn’t even leave the bones.”
  •  The Lower Your Self-Esteem, The Flashier Your Credit Cards; more behavioral finance research showing link between financial products and self-esteem (MarketWatch): “A premium credit card is typically associated with high social status and higher fees, but recent research suggests that people will choose them because it signifies higher income “over and above its benefits. Economists worked with an Indonesian bank that markets premium platinum credit cards to high-income customers. “Demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits,” according to the study distributed Monday by the National Bureau of Economic Research, a Cambridge, Mass.-based research group.”
  • Walt Mossberg, tech columnist for Wall Street Journal and Recode, writes his last column; provides historical sweep about computers and predictions about the future (Recode): “Let me start by revising the oft-quoted first line of my first Personal Technology column in the Journal on October 17, 1991: “Personal computers are just too hard to use, and it isn’t your fault.” It was true then, and for many, many years thereafter. Not only were the interfaces confusing, but most tech products demanded frequent tweaking and fixing of a type that required more technical skill than most people had, or cared to acquire. The whole field was new, and engineers weren’t designing products for normal people who had other talents and interests.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.