----- "Delaying Social Security As The Best Long-Term Return Money Can Buy" -----
The above phrase which Michael Kitces highlights in bold-face near the end of his article would appear better suited for selling cars than providing serious financial advice. ... However, based on that proposition (and assuming I just fell off the turnip-truck), is there any way by which I might mail some additional money to the government for them to invest for me in this wonderful opportunity?
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Kitices writes: "... ultimately, delaying Social Security benefits provides superior risk-adjusted returns to equities and portfolio investing in the long run. ... Obviously, this is not true in the short run – as noted earlier, it takes more than 15 years to breakeven at all. Yet if the retiree’s time horizon was that short, the proper investment would not likely be equities anyway."
1. I dispute the assertion that a retire with a 15-year time horizon would not want to own some equities. I don't think the smart folks at T. Rowe Price view it that way. Their Balanced Retirement Fund, designed for people already in retirement, carries about 40% equities. Even their conservative Spectrum Income Fund includes a 10-15% allocation to income-producing equities. If we include even a modest allocation to equities and corporate bonds in the investments of older people, I suspect many of his assumptions fail to hold water.
2. Kitices' reference to "superior risk-adjusted returns" have not been documented. He has not analyzed for us the risks of owning different types of equities, or different types of bonds, or tried to quantify for us the risks of potential drastic changes in either tax policy or SS structure - any of which could upset his delicate apple cart.
3. Kitices "proves" that deferring Social Security is a better investment than buying an annuity.
OK - I'll give him that one. What investment isn't?
4, It's somewhat incidental to the referenced article ... but part of the consideration is whom you would rather have in control of that sum of money, yourself or the government?
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I detest the pop-ups that have begun appearing asking me to send Mr. Kitices some $$ to subscribe to his newsletter. :)

From the article: "While you shouldn't pick funds solely based on fees, expenses matter because high fees will substantially reduce your returns. Remember, though, that some things in life are worth paying more for, and a good fund manager is one of those things. One rule of thumb: If the fund's expense ratio is more than 1.5%, you should be really sure about the fund manager before you buy"
Huh? Whoever wrote this article sounds like a financial adviser considering he talked about what they like to do when selecting funds for their clients' portfolios, and he spouts this crap. How exactly does one get "really sure" about the fund manager before you buy? It sounds a little like knowing your manager isn't as important if he doesn't have to overcome a big expense ratio. We know statistically that a big portion of fund managers can't beat a low cost index fund after expenses, so it seems to me you'd want to know your manager as well as you can no matter what the expense ratio is.

I'm not a technical expert by any stretch of the imagination but the pattern on the chart looks to me like a flag pattern consolidation that normally resolves itself with a continuation of the trend. If that turned out to be true, it doesn't say that gold miners should go down, it just says that bullion should go up more than gold miners OR go down less.
Since the second half of 2011 gold has been going down, after a huge rally from roughly $700 in late 2008 to roughly $1900 in late 2011. Interesting, the "box", the 50-62% retracement of that move is bounded on the lower side by roughly $1150. Gold has tested $1150 several times in the last six months and it has held. So from very long term perspective one might argue bullishly for gold.
Along with gold being weak since late 2011 the miners have been weaker, which has caused the ratio of GLD to GDX to climb as shown in the chart in the article. If the price of gold was set to rise, then a good bull market should be led by the miners as well, just like they led to the downside.
So one the one hand there seems to be good technical reasons to think that gold's next move could be higher and on the other hand the ratio of GLD to GDX would suggest to me that if the ratio is going higher and miners lead then for the ratio to go up both have to fall, miners more than bullion.
Again, that doesn't lead me to a strong belief one way or the other but I also don't think it would lead me to assume that gold miners are a bad bet.

FYI: As soon as the program becomes available for free, early tomorrow, I will link it.
Regards,
Ted
May 7, 2015
Dear WEALTHTRACK Subscriber,
Federal Reserve Chairwoman Janet Yellen caused a bit of a stir in an interview Wednesday when she commented that “equity market valuations at this point generally are quite high.”
It wasn’t exactly an “irrational exuberance” speech, a la Alan Greenspan in 1996, but pundits were quick to point out that his observation was about four years early, as the markets continued to rally until the March 2000 peak.
The market is expensive historically, based on several longer term measures including one of our favorites, the CAPE ratio, or Cyclically Adjusted Price Earnings ratio, created by frequent WEALTHTRACK guest, Nobel Prize winning economist Robert Shiller.
The CAPE, which is figured by taking the current price for the S&P 500, divided by the average of S&P earnings over the last ten years, adjusted for inflation, is currently around 27. That is well above its 20th century average of about 15.
Fed Chairman Yellen isn’t the only one concerned about stock market levels, professional investors are too.
According to a recent survey from State Street Global Advisors, of over 400 institutional investors worldwide, 63% of them increased their stock exposure over the last six months, but 53% wish they could decrease it and would if they had a more attractive alternative. Talk about conflicted!
Plus, 57% expect a market correction of between 10 and 20% in the next 12 months!
Normally investors could turn to bonds for income and protection, but with bond yields near record lows, they are no longer a viable option.
According to this week’s guest, Clifford Asness, both stocks and bonds are more expensive now than they have been in 90% of market history. Asness is Founder, Managing Principal and Chief Investment Officer at AQR Capital Management.
AQR stands for Applied Quantitative Research, which they use in a number of strategies.
Founded in 1998, AQR, now a global investment management firm, oversees more than 130 billion dollars in hedge funds, mutual funds and a diversified collection of investment strategies, from traditional long-only ones to multiple alternative approaches. I asked Asness how unusual it was for both stocks and bonds to be this expensive at the same time and what investors should be doing in response.
If you’d like to see the show before it airs, it is available to our PREMIUM subscribers right now. We also have an EXTRA interview with Asness, about his new venture with London Business School, available exclusively on our website.
If you have comments or questions, please connect with us via Facebook or Twitter.
Have a great weekend and make the week ahead a profitable and productive one.
Best Regards,
Consuelo

Take a look at HYS. Duration 1.91 years. 4.54% distribution yield.

When considering the opportunity costs don't forget that 85% of SS benefits are taxed at very low income levels. Seems essential when considering investment possibilities at today's rates of return. That being said, Gary's cautionary tale re: not making it to the crossover point, or more extremely not making it to start receiving any benefits should also be a consideration

http://www.schwab.com/public/schwab/nn/articles/When-Should-You-Take-Social-Security
The amounts are so much higher when you wait, seems like a no-brainer if you can swing it from other resources and are unlikely to die soon.

Check out Junkster's post above about his friend.
Also, when computing when do take SS it isn't only what is mentioned in their article.
When you delay taking SS; you have to take into consideration the opportunity cost of using your $ for expenses.
So, using the schwab example, if a single person could get $2,000/mo or $24K/year from SS but use their money the interest or capital appreciation would have to be added to the years to break even.
e.g. 10% interest = 2,400 x 5 year delay = 12,000
Divide the 12,000 by the SS they would get per month at 67 for the number of months. Let's say 2,600. Then you have to add 4.6 months to the break even point.
Other factors you have to take into account:
-Opportunity cost above - compounding of int/cap gains, add more time for that? .
-401K mandatory withdrawals, if you take SS later + you have 401K withdrawals you may pay more taxes than taking SS early + the 401K because your tax base would be lower- add more time for that?
e.g. 600/month x 12 = 7,200 higher base x tax rate 20% =1,400/2600 = .5 month every year 15? = 7.5 months.
4.6 opportunity cost
.4 compounding interest
7.5 extra taxes
12.5 months.
So deferring may not be financially advisable. In the Schwab example the break even is between 15-16 years - Between 77 and 78
If you want to do the calculations I'd help in reviewing them for you.

Are you sure Social Security is taxed in Mass? From Mass.gov:

21. Are Social Security benefits taxable in Massachusetts? Is the Medicare tax withheld from my Social Security benefits deductible on my return?
Massachusetts does not tax benefits received from U.S. Social Security, Railroad Retirement (Tier I and II), Public Welfare assistance, Veterans' Administration payments or workers' compensation. Any portion of such income, which may be taxed under federal law, is not subject to Massachusetts's income tax.

Regarding the parts of Medicare - A is hospitalization, 100% covered (once you begin SS benefits or apply if you don't claim SS benefits by age 65); B is doctor services, typically 80% covered, and you pay a premium (currently $104/mo). That premium is inflation adjusted and may be higher for high income retirees. The premium also goes up, permanently, if you don't start part B within roughly a year of eligibility (unless you're still working w/group coverage).
D is for 'D'rugs. Since these are private insurance plans, their premiums vary, but are still subject to penalty and high income premiums like part B. And since these are nonstandardized, each insurer has a different formulary. Like employer plans, those are subject to change with little notice.
C is Medicare Advantage. Like the group PPO/HMO plans you're familiar with, they (usually) cover everything (including drugs) but have their own networks of physicians and hospitals. So it replaces A/B/D if you use it.
You always pay your Part B premium to Medicare (even if you take Medicare Advantage instead of vanilla Medicare parts A/B/D). Some Medicare Advantage plans charge extra (and provide extra benefits), some do not. The networks are the major drawback; IMHO the major plusses are a cap on out of pocket expenses and no additional part D (drug) premium. (Under "original" medicare, you'd need a Medicare Supplement - Medigap - plan for an out-of-pocket cap.)
Medicare has standardized Medicare Supplemental Plans, so what one insurer offers must be the same as what another insurer offers for the same plan. These plans go by letters - too complicated to go into here. Since new Medigap plans (starting in 2020) cannot cover all your deductibles (new law), Medigap plans C and F will be changing, though no one knows exactly how yet. To that extent, MJG is correct, you cannot know the future exactly. But you can still have a pretty good idea of what's coming down the (Mass) Pike.
Good luck.

FYI: Overpriced and unloved.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/05/07/morning-moneybeat-time-for-large-stocks-pullback/tab/print/
Current Futures: (Not Good)
http://finviz.com/futures.ashx

FYI: Equity markets have struggled since hitting highs a couple of weeks ago. Today’s move lower left the S&P 500 right at the bottom of its normal trading range, and five of the ten major sectors are now oversold.
Regards,
Ted
http://www.bespokepremium.com/think-big/

David -- TDVFX has piqued my interest. Any idea as to what extent they are team managed, vs. Mr. Towles (elder or younger) being the key person?
In the SV space I've got HUSIX. I don't mind the past year's poor performance (that will happen to any true value fund now and then) but the 1.85% ER has always left me queasy. TDVFX seems like a similar fund, but with a small asset base (about half as big, including both the mutual fund and separate accounts for both fund familiies) and their 1.2% ER strikes me as reasonable. What's not to like?
But I am increasingly wary about funds with a "great" man or woman running them, rather than a team with a deep bench. That probably is true for HUSIX too, but glancing at their website they at least have a bigger team behind Joe Huber.

Hi Catch22,
I have few problems when discussing religion. I am a practicing Roman Catholic and am at peace with it.
Investing is a horse of a different color. Perhaps I should have qualified my comment about supporting opinions with hard data. I was referring only to investment matters, decisions, and opinions in that instance.
I have no quarrel with investing opinions. All investors ultimately form them and should act on them. That’s what makes a marketplace. As a general rule, I just don’t trust opinions that are offered without supporting documentation. I’m surprised that some MFOers take exception to something as basic as that rule.
The marketplace is awash in a tsunami of statistical data. I expect that almost all investors use some portion of that data in making investment decisions. I do.
I surely agree that investing is not all stats; it is part analytic and part gut feelings. Analyses can be overdone. Correlation is not necessarily causation. There are countless examples of chasing ghost patterns.
Remember in the 1990s Harry Dent projected a Dow 41,000 because of a faulty population aging/spending argument. It was a badly flawed model.
With the abundance of market data, reasonably high correlations can always be “discovered” to project future market prices.
Remember David Leinweber’s discovery that the butter production in Bangladesh could predict 75% of the equity market’s returns. Add the Sheep population in that Country to the correlation parameters, and the correlation coefficient advances to 99%. Of course, subsequent out of sample data convincingly disproved that nonsensical correlation.
Enough. Please attend to your paint fumes while I do the same.
Best Wishes.

FYI:
Regards,
Ted
WSJ Slant:
http://www.wsj.com/articles/u-s-stock-futures-rise-1430914380
Bloomberg Slant:
http://www.bloomberg.com/news/articles/2015-05-05/crude-extends-climb-as-gains-hit-bond-market-kiwi-sinks-on-jobs
Reuters Slant:
http://www.reuters.com/article/2015/05/06/us-markets-stocks-idUSKBN0NR17320150506
MarketWatch Slant:
http://www.marketwatch.com/story/us-stocks-set-for-rebound-with-jobs-yellen-in-view-2015-05-06/print
WSJ Markets At A Glance:
http://markets.wsj.com/us
Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
Current Futures:
http://finviz.com/futures.ashx

The Lehman bonds I was referring to and lost considerable moneys on were not InterNotes but notionally solid and safe corporate bonds, tradable, brokerage-sold, etc.: GCB LBH inc NIKKEI 225. Issued 2003.
Thanks v much (as always) for SC further detail.

Here's a quora post on these bonds; it does a good job of enumerating the issuer-specific risks:
http://www.quora.com/How-good-or-bad-an-investment-is-SolarCitys-Solar-Bonds
These bonds are not the same as typical corporate bonds. A couple of decades ago, some corporations started selling bonds direct to the public, marketing them as CD alternatives. Instead of buying bonds on the secondary market, with market discount/premium, commissions, and accrued interest costs, small investors can buy them at issue and at par (albeit at a lower coupon rate than the bonds bought by the "big boys").
They are (were?) known as InterNotes, DirectNotes, and a slew of lesser marketing names. You'll find the Solar City notes under InterNotes' unrated offerings.
But they come with a downside - they're generally not marketable - you can't get out of them until they mature or default. (See Direct Purchase Notes in this LA Times article.) That's different from typical bonds that trade through networks of brokers.
I've tended to be skeptical of these offerings - they seem to be attempts by companies to borrow from small investors when they can't borrow (at least at rates they accept) from institutional lenders. That certainly proved to be the case in 2008, when the Lehman InterNotes as well as CIT InterNotes and others went bust:

Targeting bonds to individuals “was part of a proliferation of gimmicky devices which on the surface looked attractive but was nothing more than high-pressure marketing tools,” said Arthur Levitt, a former chairman of the U.S. Securities and Exchange Commission

That's not to say that all InterNotes are bad products, but that one needs to look at them closely, and ask why the issuer is borrowing through the retail market.

I would think the odds of loss in any of these worthy funds over the next 5y to be nontrivial, no matter what they do, even, you know, BERIX and FPA. So I would stick a hundred thou, or even more, into SC 4% bonds, and make a few thou against inflation. I mean, I like very much PONDX, FSICX, DODIX, FTBFX, BOND, PDI, and a few others, but have had trouble breaking even with all of them over selected short recent periods, when I was overmonitoring.

Are you seriously suggesting that this poor fellow put $100,000 into a single bond offering issued by this company? I took a quick look at the prospectus for this bond. It's unrated, unsecured, and the protective covenants for the investor are practically nonexistent. I did a bit more research and found that S&P had rated a secured bond issue from SolarCity that matures in 2022 at BBB+, and an unsecured bond from them maturing in 2022 at BB. BB is not investment grade. Other than some posters here dropping dead from the shock, what happens if somebody like Ted Cruz or Rand Paul gets elected president in 2016 and the investment tax credit and other subsidies for solar power gets dropped? It's questionable whether there will be a secondary market for these securities (that's from the prospectus), and SolarCity isn't obligated to redeem them early under any circumstances.
I strongly suggest that the original poster take a good look at these risk factors if he's considering this SolarCity offering.

Thank you for doing some research on this matter. Personally, I would never drop $100,000 in any single offering, whether it be a bond or fund/stock. I'm a very cautious, conservative investor.

I should have mentioned that you can buy these bonds in $1000 increments if you should wish. If I read that prospectus correctly, you are also signing away any bankruptcy rights and in that unfortunate circumstance would be receiving 25% of your investment back. If you want to support solar energy and like SolarCity this would seem to be a way to do it, but it doesn't seem to be any equivalent for a savings account.

Hi Catch22 and other posters,
My portfolio's holdings, according to M*, are collectively off their fifty two week highs by about five percent. I am not doing much of anything as I have been expecting a pull back for sometime now and with this I have been carrying a good allocation to cash since my recent sell off of my equity spiff position the first part of April and, as I write, I have a ytd gain (portfolio) of about 3.7%
I am planning on a limited watch as we move through the summer and most likely start buying around the edges as we approach fall. By then, corporate earnings should start to improve. Not in a hurry though because fall ... September & October ... where I usually ramp up my equity allocation is now about five to six months away. And, I have got a lot of things planned to do this summer.
Currently, my portfolio's asset allocation, rounded, is about 20% cash, 20% bonds,
50% stocks and 10% other. Within stocks I am about 65% domestic and 35% foreign.
If stocks as measured by the S&P 500 Index dip by about 10% down towards the low 1900's then I start to perk up and do some strong looking. But, we are now only about a mere two percent off the Index's recent high. The Index will have to get down to about the 2010's range before I reduce summer activities and start spending more time watching the markets. Currently, I don't plan to do any selling ... but, I might.
Should my portfolio's assets reach a decline of ten percent off their fifty two week highs ... Well, I am still covered with my twenty percent cash position. Now, if it should go beyond a ten percent decline, then I'll need to start raising my cash position through an asset sell down process to rebalance and raise my cash position.
Signing out ... and, now 'hopefully' gone for the summer to enjoy some R&R.
Old_Skeet

.........well, not much in happy land in many places during the recent days........the last week or so with softness in equity and bonds. 'Course, such a broad statement does imply that there are not areas that are somewhat happy; but not unlike a young person or an adult who sometimes states that they are going to run away from home.........likely from having a bad day, etc. :)..........even "investors" have periods when they want to "run away from investments", yes?
Well, your house (investments) is also likely getting its "clock cleaned" from recent market actions.
Some equity market areas during the past month had about 8% down moves and then flattened for a short period of time. But, this has reversed again. India being an example of a big run in the last 12 months +, then down about 8%, but further down May 6 dropping another 2.5% or so. Aussieland also found a large drop (>2%), reportedly due in part to poor earnings in the banking sector.
All investor returns will be different, of course; but the consideration is in place for this house to reduce equity holdings today (May 6) to protect very pleasing returns so far this year from investments in particular in HEDJ. Some healthcare may also be reduced; although the gains from these holdings has been from a period of years and not months.
Ya, I know; don't be a trader or time the markets. I'll have to name this as intuition.
Broad drawdowns will likely not be more than 10%, yes? Or you best guess.
At times, I recall a portion of information displayed upon the "old" hometown movie theatre screen before the main movie............."Preview of coming attractions". Attempting to determine the "coming attractions related to investments".
Well, just some early morning (1 cup of coffee) jabber.
NOTE: this write was started and planned to be posted on May 5, but other schedules changed this.
Regards,
Catch

Nothing wrong with 529 plans, but in the priority of savings they fall far lower on the savings ladder. I would first fully fund an employer's retirement match through a workplace / self directed retirement account. Second on the savings wrung would be to fully fund a Roth IRA. Third would be funding an emergency fund in a (taxable account) equal to 3-6-9-12 months of one's salary. As important, would be to have a plan to pay off high interest loans (revolving credit).
As a "good" parent we think saving for college is a requirement. My opinion is that the fewer dollars specifically ear marked for funding college the more dollars will be offered to your college student in financial aid (grants, loans, internships, work study, etc) as they are mostly all needs based.
Your college student should strive to be a good candidate to get into college (good academics, athletic, and civic minded), but they should also be a good candidate for financial help.
Nothing wrong with 529 plans other than you are short changing your kid the opportunity to receive financial aid and sticking them with the burden and guilt of your financial insecurity.
Let your kid be needy...they'll thank you for it.

FYI: Investors flocked to these funds in the wake of the bear market and have made good money ever since.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=696533