Weekend Reads for Financial Advisors: Emotional Finance and Chaos Theory

Here, in no particular order, are some articles and resources you may find interesting. Happy reading.

Investing

• It’s always worthwhile getting a peek into Jeremy Grantham’s (sometimes depressing, always sobering) thinking. In his latest latest quarterly letter, Grantham says “our last best hopes” for averting the cliff edge are declining fertility rates and improving technology for alternative energy. (GMO, PDF)
• Also, I have flagged his before, but if you missed Charlie Rose’s recent interview with Grantham, here it is again. (Charlie Rose)

Behavioral Finance/Behavioral Economics

• Daniel Kahneman’s gripe with behavioral economics. (The Daily Beast)
• Spender or saver? The choice may not be yours. (MarketWatch)
• More on the “marshmallow test,” this time from ConvergEx’s Nick Colas. (ZeroHedge) 
• “Quantifying Trading Behavior in Financial Markets Using Google Trends” (Scientific Reports)
• The self-serving bias and luck vs. skill: “Luck Be a Lady Tonight.” (Above the Market)
• Tom Brakke blogs about emotional finance and references CFA Institute’s Research Foundation monograph: Fund Management: An Emotional Finance Perspective. (The Research Puzzle)
• “Managing the Paradox of Choice in Your Financial Planning Practice” (Nerd’s Eye View)

Retirement/Mutual Fund Fees

• Frontline‘s recent documentary, “The Retirement Gamble,” created quite a buzz on Twitter and the blogosphere. And it didn’t take long for the criticism to start. First up: “Advisers Stung by ‘Frontline’ Criticism.” (Investment News, subscription required)
• Also, what Frontline apparently missed in its documentary, according to the Employee Benefit Research Institute (ERBI): “Gamble” Gambit. (ERBI.org)
• “The ABCDs of Retirement Success,” a January 2013 white paper. (Morningstar)
• When it comes to the impact of trading fees, don’t just do something, sit there. (The Economist)
• Wade Pfau, CFA, has a new post on dynamic retirement strategies, in which he asks: “What all should be incorporated in a modeling approach which seeks to determine an optimal dynamic retirement income strategy?” (Retirement Researcher Blog)
• Here’s a handy resource that I just discovered: Michael Kitces‘s new monthly column highlighting some of the most notable recent news and articles related to retirement. (MarketWatch)
• Larry Fink’s radical retirement recommendation: The United States may need to make retirement savings mandatory. (CNN Money)
• And if you would like to watch Fink’s speech, here is an archived video. (NYU Stern, video)

China/Bitcoins/Currency Wars

• “Bitcoin: The Newest Tool in China’s Currency War Chest” (The Genesis Block)

Social Media

• “Social Media: What’s Holding the Industry Back?” (Financial Planning)

And Now For Something Completely Different

• Chaos theory turns 50. (Physics Today)

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

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