Professional Investment Services

8 Common Thinking Mistakes Our Brains Make Every Day and How to Prevent Them

8 Common Thinking Mistakes Our Brains Make Every Day and How to Prevent Them. 1. We surround ourselves with information that matches our beliefs 2. We believe in the “swimmer’s body” illusion 3. We worry about things we’ve already lost 4. We incorrectly predict odds 5. We rationalize purchases we don’t want 6. We make decisions based on the anchoring effect 7. We believe our memories more than facts 8. We pay more attention to stereotypes than we think For the in depth look at these 8 mistakes visit 8 Common Thinking Mistakes Our Brains Make Every Day and How to Prevent Them – The Buffer...

The Best Advice From A Single Guy

This is probably not something you see everyday on a Financial Services website but it struck a chord with me, especially after all the years that I have spent with couples and sometimes walked away thinking to myself that I was a relationship counselor and in fact it is often said that a Financial Planner will spend half his time as a relationship counselor. Article starts here. Nate Bagley says he was sick of hearing love stories that fell into one of two categories — scandal and divorce, and unrealistic fairytale. So he started a Kickstarter and used his life savings to tour the country and interview couples in happy, long-term relationships. He then took to Reddit’s /r/IAmA to share what he learned (just in time for Valentine’s Day), and to post podcasts of the couples’ journeys and advice. via Here’s The Best Advice From A Single Guy Who Spent A Year Interviewing Couples | Business...

How State And Local Governments Are Still Dragging On GDP And Jobs

Two of the key U.S. economic trends I expected this year were 1) a recovery in residential investment, and 2) that most of the drag from state and local governments would be over by mid-year 2012. Just eliminating the drag from state and local governments would help GDP and employment growth. I’ve written extensively about the housing recovery, and it is time to take another look at state and local government spending. In early August, the Rockefeller Institute of Government put out a report on state and local government revenue through Q1. From the press release: Overall state tax revenues are now above pre-recession levels, as well as above peak levels that came several months into the Great Recession. In the first quarter of 2012, total state tax revenues were 4.8 percent higher than during the same quarter of 2008. Starting at the end of 2008 and extending through 2009, states suffered five straight quarters of decline in tax revenues. They now have enjoyed nine consecutive periods of growth, and the second quarter of 2012 will likely extend the string to 10. Overall collections in 45 early-reporting states showed growth of 5.8 percent in the months of April and May of 2012 compared to the same months of 2011. After adjusting for inflation, however, state tax revenues are still 1.6 percent lower compared to the same quarter four years ago, in 2008. That is a little encouraging, but the news isn’t as positive for local governments: While state tax revenues have been recovering, many localities face significant fiscal challenges, according to the report’s author, Senior Policy Analyst Lucy Dadayan....

The GFC has only just begun

The GFC never ended, and the bill for a quarter century of profligacy may be due. What happened to the collateralised debt obligations and other toxic assets, which were the focus of so much attention during the global financial crisis? Were they repaid? Broadly, no. Have they increased in quality? No, United States housing has continued to fall. So where have all these toxic assets gone? Some losses have been borne by investors. Some have been written off by the institutions that owned them. But a significant volume has been taken by the US Federal Reserve and a large sum remains with banks – in both cases being carried on the books at values which are illusory. Part of the measures introduced to ameliorate the GFC was to allow the banks to pretend their toxic assets were worth more than they are. The US Fed is doing likewise. This is a strategy of solving a problem by pretending its not there – like a frightened child who closes his eyes so he can’t see what frightens him. The crisis was materially a result of over-indebtedness. Has this reduced? During the Great Depression, total US debt as a percentage of GDP reached 300%, unprecedented and not approached again for half a century. However, since 1980, debt has inexorably risen to a peak in the recent – I mean current – financial crisis, above 370%. It has since inched down to around 350%, but it is still stratospheric. In no sense has the debt problem been addressed. Yet, as markets have risen over the last few years, the confidence of investors...

Banks Swamped by Loan Refinancing Surge – Bloomberg

Mortgage rates near historic lows have sparked a refinancing boom that has U.S. lenders struggling to handle the surge. “There’s just so much volume,” said Kristin Wilson, a senior loan officer in Bloomington, Minnesota, for Fairway Independent Mortgage Corp., who has seen clients seeking lower rates climb to about half of her business from 20 percent a month ago. “We can’t just ramp up by hiring inexperienced people because they don’t know what they’re doing.” The lending logjam extends to the nation’s biggest banks, which fired thousands of mortgage workers after interest rates rose in November through February, chilling refinancing demand. Now, the time needed to close a loan has as much as doubled to 60 days, according to Wilson and other bankers, and lenders are holding some mortgage rates higher than they could be to slow the torrent of customers, data show. Refinancing applications are up 83 percent from this year’s low in February, according to an index compiled by the Mortgage Bankers Association, a Washington-based trade group. After topping 5 percent that month, the average rate on 30-year fixed loans fell two weeks ago to 4.15 percent, the lowest in surveys dating back to 1971 by Freddie Mac, the second-largest U.S. mortgage-finance company. Compounding the delays are stricter underwriting and disclosure requirements implemented in the past few years, which leave no room for shortcuts, said Stew Larsen, head of the mortgage unit at San Francisco-based Bank of the West. Wells Fargo & Co. (WFC), the largest U.S. home lender, is no longer hiring temporary staff and outsourcing firms when applications jump because of separate rule changes, according...

Aussie House Price Falls Start to Bite

“Melbourne house prices flat” – that headline is from today’s Age. Trouble is, it doesn’t match the story: “Melbourne’s median house prices stood at $551,056 over the July quarter, a fall of 0.9 per cent from the $555,958 recorded in the April quarter.” Dontcha just love ‘em? So prices weren’t flat.  It turns out house prices – go on Age, you can say it – fell. They’re a funny bunch, housing spruikers… unable to admit what we can all see with our own eyes. Even the supposedly rock-solid Sydney market is feeling the pinch.  Another Age article states, “Sydney’s median house price fell from $646,806 over the April quarter this year to $639,484 over the July quarter, a decrease of 1.1 per cent.” It doesn’t sound much.  But it is. Because don’t forget, the housing market is super leveraged… and leverage magnifies falling prices. The Aussie housing market is more than three times the size of the Aussie stock market.  So falling house prices are bound to have a bigger impact on individuals’ wealth than falling share prices. Because contrary to belief Aussies are vastly overweight on property investments.  Sure, that’s not the case if you isolate super funds, where shares tend to rule. But when you look at the big picture, housing accounts for more than two-thirds of private assets… and close to 100% of all household debt. That’s why the current housing slump is such a big deal. They didn’t believe us And it won’t be long before Sydney and Melbourne see the same falls as Perth and Brisbane.  According to the article, based on Australian Property...