Summer 2015 Investment Notes

Findings from the Latest Retirement Confidence Survey

Sponsored by the Employee Benefit Research Institute (EBRI), the American Savings Education Council (ASEC), and Mathew Greenwald & Associates (Greenwald), the annual Retirement Confidence Survey is a random, nationally representative survey of 1,000 individuals age 25 and over. Below we present a few interesting findings from the April, 2015 survey:

  • Despite approaching retirement age, almost half of workers age 45 and older have not yet tried to calculate how much money they will need to have saved so that they can live comfortably in retirement. Younger workers ages 25–34 are less likely than older workers to indicate they have tried to calculate how much money they need to accumulate for retirement.
  • Workers who have done a retirement savings needs calculation tend to report higher savings goals than do workers who have not done the calculation. Despite higher savings goals, workers who have done a retirement savings needs calculation are more likely to feel very confident about affording a comfortable retirement (33 percent vs. 12 percent who have not done a calculation).
  • A sizable percentage of workers say they have virtually no money in savings and investments. Fifty seven percent report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000. This includes 28 percent who say they have less than $1,000 in savings.
  • Many workers acknowledge they can save more than they are currently saving. Seven in 10 (69 percent, up from 62 percent in 2011) say it is possible for them to save $25 a week more than they are currently saving. This includes 55 percent of workers who have not saved any money for retirement. 
  • Amount of debt and feeling confident about having a financially secure retirement are inversely related. The RCS has consistently found a relationship between the level of debt and retirement confidence.  Only 6 percent of workers who describe their debt as a major problem say they are very confident about having enough money to live comfortably throughout retirement, compared with 35 percent of workers who indicate debt is not a problem. On the other hand, 56 percent of workers with a major debt problem are not at all confident about having enough money for a financially secure retirement, compared with 14 percent of workers without a debt problem. 
  • How long do you expect to live? Most workers expect to live to at least age 85; 40% are somewhat likely and 35% very likely. However, the likelihood to live to age 95; 30% feel it is not too likely and 32% feel that it is not at all likely. 
  • The majority (67%) of workers expect to work for pay in retirement. Reasons given for doing so include; they enjoyed working (83%), wanting to stay active (79%). But also for financial reasons, wanting money to buy extras (54%), keeping health insurance or other benefits (34%).

The entire survey and other valuable health and retirement information can be found at the Employee Benefit Research Institute website – (

Government Spending and National Debt Remain Unchecked

In fiscal year 2002, the Federal Government exceeded $2 trillion in outlays for the first time in our history. That year represents the first year in a 13 year “winning” streak of budget deficits which have added $8.4 trillion to the US National Debt. $6.7 trillion of the $8.4 trillion has been accumulated since the market crash in 2008.

Through fiscal year 2020, estimates found at the Tax Policy Center ( suggest we will add another $3.1 trillion to the pile. Outlays are expected to reach $4 trillion in 2016, a doubling of spending levels in just the past fourteen years!

If we apply Generally Accepted Accounting Principles, the above numbers are dwarfed. The total US unfunded liability, including Social Security, Medicare Parts A, B and D, Federal Debt Held by the Public, plus Federal Employee and Veterans Benefits, is approaching $97 trillion, which represents a liability of $818,000 per taxpayer.

Food for Thought

This is not a Goldilocks market. No, this is a Roseanne Roseannadanna market (Gilda Radner’s character from Saturday Night Live). Though investors seem to believe that catalysts for a market plunge should be known ahead of time, they’re likely to learn in hindsight that the specific catalyst didn’t matter. History teaches that once obscene valuation is coupled with overvalued, overbought, overbullish extremes, and is then joined by deterioration in market internals, the outcome is already baked in the cake. Afterward, investors discover “Well Jane, it just goes to show you… It’s always something. If it’s not one thing, it’s another.”

- John Hussman, Ph.D, Weekly Market Commentary, June 29, 2015 (

Fiduciary comes from the Latin word for "trust." A fiduciary must act for the benefit of the person to whom he owes fiduciary duties, to the exclusion of any contrary interest.

- Fiduciary Duty: Return to First Principles, Lori Richards, February 27, 2006 (

[I]nvestment advisers are fiduciaries with "an affirmative duty of 'utmost good faith and full and fair disclosure of all material facts,' as well as an affirmative obligation 'to employ reasonable care to avoid misleading' … clients."

- S.E.C. v. Capital Gains Research Bureau, 375 U.S. 180 (1963)

Aggressive Index

One Month.......-0.06%

Year to Date....3.59%

One Year.........5.56%

Moderately Aggressive Index

One Month........0.05%

Year to Date.....2.76%

One Year.........4.30%

Moderate Index

One Month.....0.20%

Year to Date...1.85%

One Year........2.92%

Moderately Conservative Index

One Month.....0.33%

Year to Date...0.77%

One Year........1.38%

Conservative Index

One Month.....0.27%

Year to Date...0.13%

One Year........0.27%

S&P 500

One Month.......2.10%

Year to Date....3.35%

One Year.........11.21%

Foreign Stocks

One Month............2.08%

Year to Date.........7.72%

One Year..............-0.28%

Investment Grade Bonds

One Month..........0.70%

Year to Date......  0.59%

One Year.............2.82%