Archive - November 2017

1
Details of Proposed Tax Reform
2
What Advantages Do Exchange-Traded Funds (EFTs) Have Over Mutual Funds?
3
We Now Return You to Your Regularly Scheduled Update on the Economy and Markets …
4
The ABCs of Behavioral Biases (S–Z)

Details of Proposed Tax Reform

The House Ways and Means Committee released draft tax reform legislation on Thursday. Titled “The Tax Cuts and Jobs Act”, H.R. 1, incorporates many of the provisions listed in the Republicans’ September tax reform framework while providing new details. Budget legislation passed in October would allow for the tax reform bill to cut federal government revenue by up to $1.5 trillion over the next 10 years, and still be enacted under the Senate’s budget reconciliation rules, which would require only 51 votes in the Senate for passage. The Joint Committee on Taxation issued an estimate of the revenue effects of …

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What Advantages Do Exchange-Traded Funds (EFTs) Have Over Mutual Funds?

Mutual funds and exchange traded funds are similar types of investment vehicles. Both allow investors to diversify their investment across a large number of securities, but their differences give exchange traded funds several important advantages.

A mutual fund is an investment fund that pools money from many different investors to purchase specific securities. Flows into and out of the fund are valued each day at the 4pm closing of the stock market. Mutual fund managers later decide what to purchase or sell within the fund.

An Exchange Traded Fund (ETF) is an investment fund that trades throughout the day like …

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We Now Return You to Your Regularly Scheduled Update on the Economy and Markets …

THURS, NOV 2nd, 2017

The U.S. economy continues down its years-long path of expansion. Despite the endless cacophony of hoopla and noise from the new regime in Washington D.C. the track of growth has neither picked up nor dissipated. Our broad assessment infers that the bedrock of the economy – e.g., jobs, sentiment, private sector balance sheets, and aggregate demand – is healthy. Meanwhile lawmakers have been in a state of gridlock for the majority of the year. Taken together, a measured and stable economy with little in the way of dramatic new policies from the Beltway is a celebrated …

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The ABCs of Behavioral Biases (S–Z)

We’re coming in for a landing on our alphabetic run-down of behavioral biases. Today, we’ll present the final line-up: sunk cost fallacy and tracking error regret.

Sunk Cost Fallacy

What is it? Sunk cost fallacy makes it harder for us to lose something when we also face losing the time, energy or money we’ve already put into it. In “Why Smart People Make Big Money Mistakes,” Gary Belsky and Thomas Gilovich describe: “[Sunk cost fallacy] is the primary reason most people would choose to risk traveling in a dangerous snowstorm if they had paid for a ticket to …

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