Leading the World in Wasted Time

Written by Bob Veres & Gerald E Gasber, CFP®, CIMA®, QPFC.

America leads the world in economic productivity, total economic output, earnings and wealth per citizen and a variety of other categories. Now we can add something new to the list: time spent in automobiles during our daily commutes to work.

The annual Traffic Scorecard compiled by INRIX in Kirkland, WA reveals that the average automobile commuter spends nearly 50 hours a year stuck in traffic—more than Belgium (44 hours), the Netherlands (39 hours), Germany (38 hours), Luxembourg (33 hours), Switzerland (30 hours), Britain (30 hours) and France (28 hours). Among major cities, only London (101 hours) beats the largest American cities, led by Los Angeles, where people spent an extra 81 hours in rush hour congestion last year.

In all, U.S. commuters wasted an aggregate of eight billion extra hours stuck in traffic—more than an entire workweek per year per worker.



The Most Complicated Part of Your Estate

Written by Bob Veres & Gerald E Gasber, CFP®, CIMA®, QPFC.

In recent years, a new category of assets has appeared on the scene, which can be more complicated to pass on at someone's death than stocks, bonds and cash. The list includes such valuable property as digital domain names, social media accounts, websites and blogs that you manage, and pretty much anything stored on the cloud. In addition, if you were to die tomorrow, would your heirs know the passcodes to access your iPad or smartphone? Or, for that matter, your email account or the or iTunes shopping accounts you've set up? Would they know how to shut down your Facebook account, or would it live on after your death?

A service called Everplans has created a listing of these and other digital assets that you might consider in your estate plan, and recommends that you share your logins and passwords with a digital executor or heirs. If the account or asset has value (airline miles or hotel rewards programs, domain names) these should be transferred to specific heirs—and you can include these bequests in your will. Other assets should probably be shut down or discontinued, which means your digital executor should probably be a detail-oriented person with some technical familiarity.

The site also provides a guide to how to shut down accounts; click on "F," select "Facebook," and you're taken to a site ( which tells you how to deactivate or delete the account. Note that each option requires the digital executor to be able to log into the site first; otherwise that person would have to submit your birth and death certificates and proof of authority under local law that he/she is your lawful representative. (The executor can also "memorialize" your account, which means freezing it from outside participation.)

The point here is that even if you know who would get your house and retirement assets if you were hit by a bus tomorrow, you could still be leaving a mess to your heirs unless you clean up your digital assets as well.



Recovery—For How Long?

Written by Bob Veres & Gerald E Gasber, CFP®, CIMA®, QPFC.

On Tuesday, the U.S. stock markets went up 2.39%, the highest one-day return in a month. Analysts attributed the rise to a variety of economic news that suggested that the American economy is not, after all, plunging into recession. The buoyant mood among investors may not last, but for many, it's a welcome sign that things may not be as gloomy as they seemed just a month ago.

In fact, the S&P 500 only dropped about 12%, from 2078.36 at the end of December 2015 to the bottom of 1829.08 on February 11—despite widespread predictions of a 20% bear market. Since then, it has risen on shaky legs back to more than 1978, just 100 points from breaking even on the year. Two more days like yesterday would erase nearly all of the damage in 2016.

The good economic news involved construction spending, which reached its highest level since 2007. Oil prices were also gaining ground, although it's hard to see why the average American would find reason to cheer about that. In addition, new orders and inventories stabilized in the manufacturing sector, after experiencing downturns in the last quarter of 2015. Other factors include the possibility that U.S. stock investors may finally have decided that declines in the Chinese markets are not going to directly affect the value of American-based businesses.

None of this means that we know what will happen next. Neither we nor any of the pundits you see on the financial news have any idea whether that long-awaited 20% decline will materialize, or the markets will continue to recover and we'll all look back on February 11 prices as a great time to buy. But it's worth reflecting on how unexpected this latest rally has been at a time when it seemed that all the news pointed to more pain and decline. Anybody who believed the pundits and retreated to the sidelines after the January selloff is now sitting on losses and wondering whether to jump in now and hope the gains continue, or wait and hope for another downturn, and risk losing even more ground if this turns out to be a long-term rally.

We can never see the next turn in the market roller coaster, but long-term, the markets seem to operate under the opposite of gravity. You and I know with some degree of certainty in which direction the next 100% market move will be, even if we can't pinpoint when or where.



The Prediction Game

Written by Bob Veres & Gerald E Gasber, CFP®, CIMA®, QPFC.

If you want to look like a brilliant stock market analyst, keep predicting the same thing over and over again until it finally happens.

A great example of this marketing strategy is newsletter publisher Marc Faber, whose website modestly describes him as "an international investor known for his uncanny predictions of the stock market and futures markets around the world." He is also, in some circles, known as "Dr. Doom."

On January 1 of this year, Faber predicted a weakening U.S. economy, and said that he expected U.S. stocks to fall in 2016. Uncanny, right? Except that in August of 2013, Faber was telling MarketWatch essentially the same thing, predicting a 1987-like stock market meltdown that could see the S&P 500 fall more than 20%. (The index ended that year up 32.4%.)

In December 2013, Faber offered his predictions for 2014, saying that the market will decline in the coming year—and recommended that his investors buy gold instead. (The S&P 500 was up 11.74% in 2014, while gold prices went down 2.19%.)

This is yet more evidence that we should tune out anyone who claims to have predicted the future with accuracy—as if we need another reason to ignore gypsies with crystal balls, soothsayers wearing wizard hats, palm readers and stock market pundits with sketchy track records. Alas, these people tend to come out of the woodwork whenever markets go down, and they prey on our desire to know when the pain will be over. They also tend to get more attention from the press than more honest analysts who refuse to play the prediction game and openly tell us they don't know what will happen next. The folks who have been predicting a market crash year after year deserve no credit for finally stumbling on an accurate forecast.


Buying Guaranteed Losses

Written by Bob Veres & Gerald E Gasber, CFP®, CIMA®, QPFC.

Surely one of the strangest trends on the world investment markets these days is banks paying negative rates to depositors, and bonds issued with negative interest rates. Basically that means that these institutions, and issuers, are guaranteeing a loss when you invest in their bonds or otherwise lend them money.

This unusual trend, which has been growing quietly in the background throughout Europe, became news last month when the Bank of Japan, the Japanese equivalent of the Federal Reserve banking system, announced that, starting February 16, it would pay minus 0.1% to Japan's lending institutions on all new money deposited into the central bank's reserve accounts. (The central bank will pay 0% on deposits required for regulatory reasons, and will continue to pay +0.1% on existing deposits.)

For the past year and a half, the European Central Bank has been "offering" sub-zero rates to its member banks—currently charging 0.3% for holding banks' cash overnight. The Central Bank of Sweden, meanwhile, leads the world in negative deposit rates, at -1.1%. The central banks of Switzerland (-.75%) and Denmark (-.65%) also charge dearly for the privilege of loaning money to their governments.

By the end of last year, roughly a third of all the bonds issued by Eurozone governments also carried negative yields—meaning that it wasn't just banks that were willing to buy investments guaranteed to lose money. French government bonds with a two-year maturity paid investors a handsome -.292%, and German two-year bonds reached a record low of -.348%. Now Japan is joining the fun, with two-year bond yields at minus 0.85% and bonds with 5-year maturities "paying" a negative .08%. This is the obvious reason why global investors are flocking to Treasuries and dollar-denominated bonds. The yield spread between U.S. corporate bonds and the bonds issued by foreign countries have seen a dramatic rise over the past 12 months.

Negative payments are considered to be a particularly effective way to shoo money out of the parking lot and force banks to start lending it into the economy—driving up the supply of available money and thereby driving down rates. It's a form of economic stimulus to everybody but the banks themselves, and also lowers the value of the currency—which, in turn, stimulates exports and raises profits of companies doing business overseas. A double stimulus, if you will.