Reply to @Old_Joe: I stand corrected regarding the paying of a load when exchanging from one fund to another. However I still maintain the opinion that the loads and/or higher-than-normal fees of the "C" class shares are one of the main reasons for the exodus from the fund family.
As you pointed out Joe, the load does diminish as your cumulative holdings increase however by the time you hit that "no load threshold" of $1M you'd have paid approximately $25,187 (2.5%) in load fees (assuming all investments were in "A" shares). Granted that's without your account amount rising on its own due to performance so the number is hopefully lower but that's still a substantial amount.
I understand that the advisors need to be paid in some way and I'm not disputing the fact. However I think the business model of how they get paid (i.e. loads) is a dying breed. With the advent of ETF's and competition between fund families, ETF issuers and discount brokers increasing, the price to invest has been dropping precipitously during the recent past. I also feel more people are becoming DIY'ers and not needing (or should I say wanting?) investment help. And if they do they're more likely to go to a fee-only based advisor, skipping the front-end load and/or higher ER funds of the past to pay for that advice.
Again, I'm not trying to condemn American Funds for their fee structure (actually I've held their New Perspective-ANWPX Fund since my grandmother bought me some at it's inception in 1973 and have been quite pleased with the performance). All I'm pointing out is that the investment landscape, or at least the costs associated with it, has been changing dramatically recently and as investors continually demand lower-cost options, Amercian Funds doesn't seem to fit that bill.

Reply to @scott: Fine. I wasn't posting to criticize or anger you but rather to learn why they are necessary or important. I explicitly excluded you , the original poster and everyone who understands these critters, has at least average investing acumen, knows what's in their portfolio's and why and has a reason to invest in them. I'd say conservatively off-hand that 90% of investors don't fit that criteria. These investments neither upset or frustrate me, I just fail to see their relevance for the vast majority of investors. I didn't say either one of us was right or wrong, it was just a comment. You will also note that I specifically did not mention whether I used such funds and I also made a point of noting that only you could judge if they were right for you or not.
Since you do not intend to comment anymore on this thread I would like to invite you to open up a new thread detailing for me why these funds are important, and how much of one's portfolio should be allocated toward them. From my limited viewpoint I would think that if you are going to be making these kind of investment bets than your entire portfolio should be nothing but this. If you're going to go long and short the market then let the manager decide what your long and short of. Why have an otherwise diversified portfolio and then throw one of these in on top of it? Why not just a short fund then? There must be reasons that so far escape me so I'm open to hearing them.
Most importantly, since you brought it up, what percent of your "entire" portfolio is allocated to these alternative investments, and what percent do you think there should be in one's portfolio to have any meaningful impact?

Reply to @Investor: Actually, the mechanical watch industry is doing quite well. At least one new watch firm seems to be founded every year; and the industry warns of a forthcoming shortage of watchmakers. Watch magazines have also proliferated, prices for even pedestrian vintage watches are on the rise. Consider also that ETA (now owned by Swatch Group) will no longer under law have to supply movements to mechanical watchmakers in Switzerland, and many of those companies that would otherwise be left out in the cold are investing in and releasing their own movements, which is not a low-budget endeavor, even with modern CAD techniques. And movement design reflects more than a basic need to have something to put into the case -- there was an arms race in escapement design and materials research among several of the major houses beginning just a few years ago which continues to this day. Indeed, we are in a mechanical watch renaissance.
Some of this boom is no doubt due to rising wealth (and wealth disparities) in emerging markets and elsewhere. Even value-for-money brands like Omega are opening boutiques in major international cities. So there must be other drivers of the growth. My father-in-law made a prediction when my wife was a teenager: he said that once the whole world went electronic (digital?) people would discover a fascination with the mechanical. He appears to have been quite prescient. The Great Recession certainly had an effect on markets, but also served to push up volumes of units sold at the higher end and in precious metals. Heck, Ralph Lauren has launched his own mechanical watch line with movements by JLC and (I think) Piaget. Could there be Japanese-style luxury goods consumption effect? Don't know.
Now the quartz crisis and Japan were supposed to mark the death knell for mechanical watches. Those were tough times. Companies like Girard-Perregaux and Jaeger LeCoultre spent a few rough years making pens as well as instrument panels for car dashboards. Skilled watchmakers found themselves replacing batteries for a living. And then Jean Claude Biver came along. JCB had exceptional business acumen, saw the romance of the mechanical watch, and resurrected Blancpain (quite literally, buying the rights to the name and re-establishing the brand), as well as movement manufacturer F. Piguet (which Blancpain later aquired) shortly after the onslaught of the quartz crisis. After that, he breathed new life into struggling Hublot. Nowadays the likes of Dirk Dornblüth starts a small shop making attractive but unassuming, very good quality watches with original movements in Germany and find himself (and his son) within a few years hiring watchmakers and expanding offerings.
I'm no marketing expert, but I really don't think one can make the case that the industry is dying. Not yet. One day? Sure, I suppose, but many firms aren't ditching their entry-level offerings (many are retooling them). Is this a last gasp? Dunno. I watched watch prices increase >15% a year since 2000 and thought the whole thing would collapse upon itself. No such luck. Could it all go the way of high-end audio? That's one possibility. Are mechanical watches at all practical? No, certainly not. As accurate as digital devices? No, not even close.
But the death of watch making doesn't seem to be on the horizon any time soon. Far from it. Right now we are very much living in an horological renaissance.

Reply to @ron: Well said. Can't escape presence of smart phones, Blackberries & IPads connected to the web. George Orwell would love it. (from a literary perspective only)

Reply to @bee:
Hi Bee,
I too was fascinated by Charles Ellis’s assessment of mutual fund management fees. I didn’t think it was possible, but Ellis out-Bogled cost containment master John Bogle himself with respect to cost analysis.
John Bogle forever cautioned that cost matters should be judged against prospective annual returns. A 1 % management fee is less onerous when a 10 % annual return is expected and delivered than when a 5 % yearly return is realized.
Charles Ellis proposes a more challenging demand since you already own your portfolio, and are entrusting it to your fund manager's protection against the vicissitudes of general market uncertainty. He suggests that the fee schedule should be coupled to returns measured against a relevant benchmark. Little chance of that ever happening.
Ellis has long been a staunch ally and advocate of passive Index investing. I was shocked when he wrote a book, “Capital” , in 2004 that chronicled the history of The Capitol Group Companies, financial and investment advisors for the American Funds family. I found it unlikely that Ellis would elect to do this task, and even more unlikely that Capital would enthusiastically participate in this company biography, given Ellis’s preference bias and passion for passive fund management. Strange bedfellows indeed.
Yet Ellis produced a book that extolled the virtues of the long term investment outlook, the team management concept, the shunning of investment superstars, and publicity that characterizes Capital and American Funds long, and mostly distinguished, record. Given a long enough time horizon, bad outcomes damage all investors: private, professional, and institutional alike. Recently, American Funds suffered that regression to the mean.
I love analogies. They help in the understanding of a complex landscape and provide stories that facilitate memory. Your toll booth analogy serves both those desirable purposes. It is excellent. I will certainly remember it, and might use it. Congratulations.
Thanks for your contribution, especially for your perceptive analogy.
Best Wishes.

Dear friends,
I always hope you folks are doing well. Especially as I speak with chip about conditions in eastern New York (roads impassable because of fallen trees and lines, no utilities, even folks with generators running out of gas, two-hour lines at the few open stations - all of that for the folks fortunate enough to have escaped direct personal loss), I mean it more now than usual.
After a slight storm delay, we posted our update. There is, I think, some cool stuff there.
Scout Unconstrained Bond and Stewart Capital Mid Cap are profiled this month, and both seem to be doing freakishly well - consistently high returns, moderated risk. I might try to find a way to talk directly with the Scout manager. Up until now, he's mostly been replying to questions via email.
Because folks want to launch new funds before January 1 and the SEC imposes a 10-week registration period, October usually sees a lot of new funds. This month, with about 30 no-loads and active ETFs, was no exception. I've highlighted four that seem especially interesting.
Finally, I think I'd like to commit to a monthly conference call of the sort we ran with David Sherman from RPHYX and was hopeful that you might both think about the project and think about becoming involved in the calls. I'm imagining a system in which we do interviews with paired funds in consecutive months: two neat long/short managers in November and December, two focused managers in January and February, two emerging markets guys, two unconventional income guys, that sort of thing.
Mitch Rubin (RiverPark) and Matt Moran (River Road) have both signed on to be our first pair. If you could think about how to make for really productive conversations and how best to attract folks to the calls, I'd appreciate your reflections.
Take care, dear friends.
David

Last week Annaly Capital’s CEO Wellington Denahan-Norris (who this week replaced the late Michael Farrell who tragically passed away), said some very interesting comments to Bloomberg on the state of the risk markets. After discussing the impact of the Fed buying Agency MBS she said:
“It’s not just at the mortgage REITs where the returns in this market are being put under assault, It’s the general global landscape where you have an incredible mispricing of risk that’s being delivered at the hands of academics at the central banks of the world.”
Worst fear #1--an unforeseen sharp rise in interest rates resulting in principal losses to fixed income allocations (bond funds.)
Worst fear #2--financial repression/negative real return/negligible yield on any better credit quality/shorter duration asset continuing on and on and on for years.
Either scenario equates to a damned whether you do or don't costly outcome for those who saved instead of spent, the flip side regression to mean for fixed income funds which have enjoyed decades of gains in addition to yield.
Fidelity Floating Rate and RPHYX are held as interest rate risk hedges. A doubling of precious metals exposure from 5% to 10% (gold, silver, mining shares and funds) was done through spring and summer to hedge against the rash actions of poison Ivy League economics PhDs.
http://www.realclearmarkets.com/docs/2012/10/Population delusions 121007 great disorder.pdf
So I keep wondering to myself, do our money-printing central banks and their cheerleaders
understand the full consequences of the monetary debasement they continue to engineer?
Inflation of the CPI might be a consequence both seen and measurable. A broad inflation of
asset prices might be a consequence seen, though not measurable. But what about the
consequences that are unseen but unmeasurable – and are all the more destructive for it? I feel queasy about the enthusiasm with which our wise economists play games with
something about which we have such a poor understanding.
My point is to show that money operates in many social domains beyond the
financial, and that tying currency devaluation to social devaluation might have some merit.
-Dylan Grice/SocGen
Money doesn't talk it swears.
-a different Dylan

Hi Catch;
Thanks for your thoughtful and thought-provoking post. I enjoyed it, although some of the logic that guided your detailed interpretations did escape me.
Indeed in the last decade, institutional investors have replaced individual investors as the primary market movers. And their trading frequency and volume have furiously increased. Supercomputers have greatly facilitated this escalation. Huge trades are now completed in microseconds.
I’m more ambivalent over this emerging development than many others are. Both positive and negative aspects to this rapid trading exist.
The super machines permit rapid fire analysis that exhaustively examines a nearly endless array of parameters in the decision making assessment. Evaluation errors are not made. The machine is not prone to the common human failures coupled to hubris and overconfidence. It is not lazy and will not need frequent coffee breaks.
The downside is that the machine is captive to the limitations of its programming. Hopefully all programming errors have been discovered and rooted out of the system. The machine has no imagination, and will slavishly follow its instruction set, even when it is no longer appropriate given changing market conditions and prospects. Human intervention will always be needed to monitor for Black Swan events.
Overall I do not fear computers or the ascendancy of institutional investors to their primacy role. At present, there is a sufficient independent institutional population to secure the diversity of opinion needed for a functioning mostly Efficient Market. Independent judgments are mandatory to avoid the pitfalls of group-think.
I too like and use (along with a small set of other indicators) Index moving averages to guide equity entry and exit points. Since I am a long-haul investor my signal set tends to have whiskers in terms of timeframe.
The list of candidate indicators is never-ending; each has its merits and its shortcomings. It is likely that an indicator soup composed of several fundamental indicators serves the investor best. For example, one popular speculation-influenced indicator is the AAII Sentiment survey reported on their website. It is interpreted as a contrarians signal To each his own technical poison.
I was fully puzzled by your selection of the late July 2012 date as a significant signal for the US Dollar Index (DXY). My perplexity is not surprising. To me, it looked like daily noise. I do not comprehend its complex construction (it is not clear why the dominant European component and the lesser Japanese component should be in sync) or its historical performance (lots of peaks and valleys lacking fundamental economic drivers). The DXY Index baffles me.
It is true that the DXY registered a local mini-maximum in the money exchange market landscape, but so what? Many such local maximums were recorded in the last three years. One such local high trading mark was logged around June 1st of this year. Catch, why is the July peak so relevant to your thinking and planning? Your post suggested it was a particularly vital tipping point.
Thanks again for your stimulating contribution. It certainly expands the discussion framework. It motivates participation, and that should improve everyone’s investment decision making.
Best Wishes.

Reply to @Anna:
Hi Anna,
I just returned home from my normal weekend tennis match. Truth be told, at the average age of my doubles foursome, the event is more social in character than it is a competitive contest.
I was not altogether surprised by your reaction to the reference I provided. Complexity and Chaos Theory can be a daunting challenge, especially if your background is not rooted in scientific training.
Typically I write as quickly as I can type so my submittals sometimes are not carefully planned and sometimes not well crafted. That was the case when I posted my last reply to you. However, I paused a considerable time when mentally debating if I should include the Santa Fe Institute Complexity Theory reference. Obviously, it was a misjudgment on my part.
Complexity is surely an early evolving scientific discipline. It has both it proponents, and a fair share of opponents. I’m sure some of your confusion on the subject is caused by its strange vocabulary and invented jargon. Even Complexity specialists advocate for a more precise definition of terminology. To us non-specialists, terms like landscape, emerging properties, self-organized criticality, scale-free power law distributions, and automata are perplexing concepts and hamper a quick understanding. Complexity Theory language needs more refinement if it wishes to attract public support .
I was optimistically hoping that if you do not wish to probe more deeply into the Complexity topic that you would have eschewed the reference. It’s always the readers option. I’m happy that you chose to shortstop your review of the Santa Fe document and limit a waste of your energy. That was a prudent action to take.
Complexity Theory is not a mature science by any benchmark. It needs much work. Melanie Mitchell is a Complexity Theory researcher. In her book “Complexity, A Guided Tour” she wrote that the discipline is “waiting for Carnot”. Sadi Carnot was a 19th century physicists who organized the thermodynamics science. Mitchell observes that “Similarly, we are waiting for the right concepts and mathematics to be formulated to describe the many forms of complexity we see in nature”.
That might be a very long wait indeed. Complexity is a real tough nut. After World War II ended, Norbert Wiener created a large following for his emerging Cybernetics discipline. Its extravagant promises were never realized, and now it has a rapidly diminishing cohort. Perhaps that fate awaits Complexity Theory. I hope not. In 1995, science writer John Horgan penned an article titled “Is Complexity a Sham?”. I think not, but its promises remain largely unfulfilled.
You asked about the origins of Complexity Theory. I don’t have recall of a definitive answer to that question, although I do remember that Information Theory inventor Claude Shannon in 1954 and dynamical meteorologist Edward Lorenz in the early 1960s uncovered extreme weather outcome sensitivity to tiny changes in the initial condition input data. His discovery was later called “the butterfly effect” now commonly recognized in the popular scientific literature. Both Shannon and Lorenz were inadvertent contributors to the origins of complexity analyses. Complexity Theory is certainly a modern science that heavily delves into networking phenomena.
If this subject really does tickle your curiosity, I recommend you consider getting a copy of the Duncan Watts 2003 book titled “Six Degrees”. The subtitle of the book is “The Science of a Connected Age”. Although he is associated with the Santa Fe Institute, and holds a Ph.D. in theoretical and applied mechanics (heaven save us), he is an exceptionally gifted author who writes for the general public. He is a super story teller and his published works are very accessible to most everyone.
Before you buy the book, you might want to try a few of his many videos available on the Internet. Here is a Link to one of them called “The Myth of Common Sense”; it is not necessarily the best he offers:

Thank you for reading and replying to my MFO posting. The more we understand this complex, interconnected, networked world, the better investment opportunities will be revealed to us.
Best Wishes.

Hi Anna,
Absolutely yes. Given any market event, expect a wide range of reactions. In essence, that is what markets are all about.
Your proposed group reaction, as well as those suggested by Catch and Investor, are all plausible actions.
Even in an Efficient Market whereby all relevant information is 100 % distributed to all participants, action plans and decisions will vary dependent upon risk tolerance, financial goals, current wealth status, and investment timeframes. The interpretation of the available information coupled with the diversity in portfolio objectives guarantee a huge array of distinctive responses that are particular to any single investor or an institution. The perturbations are almost endless.
Even Complexity Theory with its multidiscipline scientific staff and unlimited access to supercomputers has failed to make much progress in this arena. These computers explore thousands of random trials using thousands of market participant agents. Some very general insights have been teased from these efforts, but measurable progress is painfully slow with many reservations.
One fundamental issue is the modeling of the individual agents (participants) in the simulations. Faithfully characterizing these agents is an elusive task. All agents do not react in a time or situational consistent manner; real world agents are emotional. As noted, the market players change. We are all exposed to and are influenced by others, some trustworthy, some charlatans. Modeling in this environment is a Herculean ordeal. I’m not sure it can ever be done with acceptable fidelity.
The overall investment world is highly nonlinear with countless feedback loops. Critical thresholds that can not be predicted in advance are violated and group think can be established that devolves into manias and panics. Bifurcation tipping points are frequently violated that are not anticipated and escape any analytical analysis. The future can not be forecasted.
So your group of investors exists, my group and Catch22’s group and Investor’s group all exist, as do a host of others. The precise number of groups and the population within each group remains a mystery. This is one of the mysteries that keeps research outfits like the Santa Fe Institute and others from accurately modeling the complex investment universe. We all keep trying to develop a better understanding however.
This well might be overkill in a sense that it exceeds your current modeling interests, but here is a Link to a Santa Fe research paper that discusses agent modeling:
http://tuvalu.santafe.edu/~jdf/papers/aimr.pdf
Good Luck and Best Wishes.

Hi Guys,
In his newly minted book “The Signal and the Noise”, author Nate Silver introduces readers to Jan Hatzius, chief economist for the Global Investment Research division of Goldman Sachs. The position alone establishes that Hatzius has gravitas and power to influence.
Additionally, Silver saddles Hatzius with yet another accolade: that of an honest man who acknowledges how easily his forecasts might be wrong. According to Silver, this is a rare commodity among forecasters and economists. Chief among these attributes are Jan Hatzius’s skepticism of correlations without causation, and the requirement to identify accuracy boundaries for all forecasts.
Up to this point, economist Hatzius has escaped my attention. Based on Nate Silver’s endorsement, I searched the Internet for some video predictions made by Hatzius. A plethora ( perhaps a plague if you deem his projections negatively) of such videos exist. My quick evaluation of several of these predictions is that they are reasonable assessments of the global economy.
For what it’s worth, here is a Link to a June, 2012 presentation that addresses prospects for the latter-half of 2012. It is titled “2012 Mid-Year Economic Outlook”. The Link also provides access to four other Goldman Sachs video presentations. If it has been posted on MFO earlier, I apologize for my repetition and/or tardiness.
http://www.goldmansachs.com/our-thinking/focus-on/outlook/index.html
Enjoy this brief summary of the Goldman Sachs anticipated global market rewards and failures for the remainder of this year. You can contrast Hatzius’s mid-term projections against his initial 2012 year forecast.
Best Regards.

I'm not quite sure what to make of the story. Royce created a fund that was impossible for most investors to get into and then was surprised, as it seems the author was, that most investors paid no attention to it.
I've been watching the fund for years, but its two entry barriers placed it outside our coverage universe:
1. "Only 'qualified investors' may invest in the Royce Select Funds. A “qualified investor” ... has a net worth ( excluding the value of the primary residence) of more than $2,000,000; or ... owns Fund shares having a net asset value of at least $1,000,000. "
2. The minimum initial investment for qualified investors is $50,000.
The fund has now eliminated its variable-fee structure and, thus, escaped the first, SEC-imposed hurdle but the $50,000 minimum remains.
David

Disappointing to me that folks like Christian Wagner, founder and chief investment officer of Longview Capital Management LLC, get portrayed as modern day risk managers.
Here's strategy from the Longview site, emphasizing "Downside Management."
A Flexible Strategy for A Changing World
The Longview Global Allocation Fund seeks to preserve and grow capital by producing absolute returns with reduced volatility. At Longview, we believe the changing global landscape presents investors with an unprecented opportunity to shift their investment perspective, establishing a global allocation strategy as the core of their investment portfolio.
Here is the performance of their showcase fund Longview Global Allocation LONGX, which I believe shows they captured most of the downside and little of the upside:

And, for the privilege of owning LONGX, investors get to pay 5.75% front load and 2.72% ER.
Can you believe?

Hey there Hank-
Just a few weeks ago we spent a week or so up near Vancouver and Victoria... probably our 4th or 5th trip to that area. Back in the 70s we spent three weeks traversing Canada from Nova Scotia to Vancouver via rail, spending several days in Toronto and Halifax, and a week or so in Jasper in the Canadian Rockies. Rented a car in Nova Scotia (got clear out to the end of Cape Breton Island) and Jasper- good highways and good people for sure. What a great trip!
We really hope to visit the Michigan area before we pack it in... lots of friends back there.
Take care!

Try again
Thanks to all,
Yes, I can read the html and will try some experiments. I quit doing a blog in May, 2005. If interested just click on My old blog . Note my reference to Netscape 3.04; it shows how old I am. A good reference for html is at W3Schools

Thanks to all,
Yes, I can read the html and will try some experiments. I quit doing a blog in May, 2005. If interested just click on My old blog . Note my reference to Netscape 3.04; it shows how old I am. A good reference for html is at W3Schools

Thank you, Scott. You were there for me back on FA, and I still hold some of your recommendations in an IRA. My posted was getting long; I should have included no debt, LTC purchased long ago (excellent policy), have a second home - mostly escape for Midwestern winters.
Yes, I have been doing my best to educate our two children and now our two grandchildren. I totally agree that education is lacking in this very important area. And, then, when so much time is spent with one's career and children, finances can take the back burner. I am doing my best educating our grandchildren. Lesson one was many years ago when in a restaurent I gave them the choice of a beverage - or water and money that the beverage would have cost. You know what they chose. LOL Last night my 8 year old asked me how much a stock costs as he's interested in buying stocks. We started talking Disney, Harley Davidson, McDonald's, etc. My g'kids finish the phrase when I begin it - "If you spend it - you can't save it." Doing my best!
And, yes, Rono many years back also told me when I was saving toward retirement to be sure I thought of myself and used retirement funds on myself. Fortunately, even though I have been caring for relatives for more than 25 years, I am in excellent health. My goal now is to take care of myself and learn how to focus on myself.
I have put 'fee based - based on performance' on the top of my priority list. Thank you for your efforts in assisting me - very much appreciated.

Richard Russell writer of the Dow Theory letters recent commentary is linked below for your reading pleasure.
http://www.investmentpostcards.com/2012/08/09/keep-an-eye-on-may-stock-market-peaks-says-richard-russell/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+wordpress/VYxj+(Investment+Postcards+from+Cape+Town)
Good Investing,
Skeeter

Reply to @perpetual_Bull: Agreed and agreed. Some occasionally escape and/or rise above it while others are destined to just go with the flow. Although we may want to be the one at the top not all of us are going to get there.
however, I would not be shocked. Sen it too many times. Darn near had to beat one of my kids in order to get her to participate in just such a plan despite her pleas of not having enough spare money. I might be shocked to see a 401k plan crash though. That is funny; or maybe not. Sad.

Hi Guys,
Experience is never out of style.
I was somewhat taken aback by the many replies that emphasized the difficulties of securing gainful employment for older workers. Note that I included the qualifier term “gainful”. I certainly concur that being a greeter at WalMart is less than a gainful and meaningful job. Of course, I recognize and respect those at the lowest end of the wealth distribution curve who must do this task for basic survival necessities.
Life is not necessarily fair, but surely some suffer this dire predicament because of their own life’s choices.
Catch22 opined that “ For several decades, from the very large and well paid middle class in MI; this state was far ahead of any other states for the number of registered motorcycles, boats, snowmobiles, travel trailers/campers….”. Further, he observed that “The big money was coming into these households and headed right back out the door via a payment book.”
This is a recipe for disaster in any state, especially in my high cost state of California. But this is a financial sin of the first magnitude that is not restricted to middle aged or senior citizens. It is pervasive throughout society, in particular a defect that government promulgates and practices.
As a little aside, this reminds me of a description of California that I received recently from an East Coast friend. On July 4th 1850 California became a state. People had no electricity; the state had no money. Almost everyone spoke Spanish. Gunfights erupted in the streets. Not much has changed in the last 161 years.
Even in the best of times, many folks are procrastinators; others are lazy; still others just want the good times to roll. These folks will likely, unless they win the lottery gamble which they frequently play to excess, never approach the magic Number that permits a safe and worry-free retirement. They are typically debt gluttons.
I have very little empathy for such misguided souls. Some folks make poor decisions their entire life. You and I are not responsible for these decisions. They were always free to choose. Of course, I exclude from this grouping the truly unfortunate folks who suffered tragic, personal Black Swan events none of which were their design or doing. Bad stuff happens. I have great empathy for this unlucky cohort.
I strongly believe that experience matters a lot in the business world. Not only does experience matter for the elite worker classes (doctors, scientists, engineers), but also for the more mundane, but essential, groupings (bakers, electricians, lumberjacks, plumbers, gardeners). The list whereby experience contributes to superior performance and outcomes is endless. I’m prepared to challenge you naysayers to identify a legitimate business endeavor where experience is not crucial to success.
Daniel Kahneman acknowledged the experience factor in his book “Thinking, Fast and Slow”. He gave numerous illustrations of how experience permits a worker to develop recognition skills and solution approaches. He used chess masters as one of his examples. In summary, he concluded that at last 10,000 hours of practical experience is needed to gain proficiency in many working assignments. Malcolm Gladwell also highlighted the 10,000 hour rule in his writings.
Growing old is neither apocalyptic nor is it a Golden Age. Education, experience, prudent savings, and wise investing enhance the odds towards Golden and away from apocalyptic. Successful seniors adjust, adapt, and survive. Sometimes events force the retiree to reenter the employment marketplace. I agree that it is not an easy task, but it is doable and the national statistics support that assertion.
Here is a Link to a government study that was completed in 2010:
http://www.bls.gov/opub/ils/summary_10_04/older_workers.htm
The reference report shows employment data dating from 1948 to 2008.
Yes, the over-55 unemployment rate has recently escalated, but it’s at a relatively low, single digit level (see figure 2). Yes, it does take an older worker a longer time to find a new position. But he does. Figure 3 demonstrates that the senior workforce participation rate has been increasing recently while the participation rate for the youngest cohort has been decreasing. Note the trendlines. I’m sure a part of that trendline is caused by poor investment decisions and a shrinking retirement nest-egg. Too bad.
Please visit the reference and form your own interpretations of the data sets.
There is little doubt that aging erodes most skill sets. Youngsters work faster; seniors work smarter. Youngsters work creatively; seniors work with consistency. Tradeoffs are plentiful that naturally include wage and benefits considerations. Some firms now seek senior employees. It is a shifting marketplace. When Bell telephone initially hired an operator staff it was all male. They soon learned that females were better and more reliable at that job and adapted accordingly.
I have sympathy for those individuals who lost positions that reflected both economic realities and age discrimination. It is equally hard on the ego and hard on the pocketbook. I appreciate that it does happen. I never faced that stressful circumstance. I like to think that I avoided that forlorn scenario by planning ahead. I did work for outfits that suffered layoffs. I escaped by working harder, by working cheaper, by changing positions, by moving to other locations, and by continuing my education. I survived by being proactive, by being flexible, and, admittedly, by being a little lucky.
Persistence can and often does win the day. There is some truth to the observation that “Those who know better don’t always do better”. Like Woody Allen remarked: “Eighty percent of success is showing up”. Just don’t abandon the hunt.
Loads of great discussion and diverse viewpoints. I enjoyed all of them. Thank you.
Best Wishes.