"Thanks, Mark. My data can't test that idea, since the call sample only starts in January 2024, but it does show the noise missing in both directions so far: a recession came up on 8.2% of calls in early 2024 and on 22.2% in April to June 2025, and neither time did one follow. Your chocolate is a good example of what executives now mean by affordability: the product changes so the price can hold."
"if you’re crazy, we both are. I would do the same thing for the same reasons. Your last paragraph says it well. This assumes your new out of pocket maximum isn’t insane. If you said what it is I didn’t see it."
"On July 21, 2026 The Wall Street Tax Association with others had an educational seminar where it has been reported that some IRS officials made comments expressing concerns about certain ETF investment strategies the government argues are not “consistent with the intent of Congress regarding IRC 351. In late September 2026 the IRS issued Notice 2026-62 and Revenue Ruling 2026-20. The stated purpose of the Revenue Ruling is - Should a transfer of securities to a newly formed exchange traded fund that is intended to qualify as an exchange to which § 351 of the Internal Revenue Code applies fail to qualify as such if, as part of the same plan, some or all of the transferred securities are distributed pursuant to § 852(b)(6) in redemption of shares held by an “authorized participant”? On 10/28/26 Jeff Levine at Kitces.com published a long article and a 35 minute podcast titled- New IRS Guidance On Sec. 351 Exchanges And ETFs: Managing Tax Risk Of Tax-Aware Investing which is worth a read if you are interested in the topic."
FINANCIAL EMERGENCIES have a way of compounding when least expected. This is often coined as a correlated risk. I call it running out of clean underwear. My father used to profess, in emergencies, that turning pairs inside out was a legitimate way to extend undergarment use under duress. Financially, this is merely extending the life of a depreciating asset. I am sure my mother would have refuted this concept. Nevertheless, before you judge me too harshly, allow me to share the situational details.Three weeks ago our 7 year old washing machine, an example of aging capital equipment, began exhibiting signs of being possessed. Wash cycles were accompanied with grinding noises and violent walks across the floor. Spin cycles initiated poltergeist-like behavior, with heavy banging and metallic thuds made by nether-world demons.An internet search revealed the probable cause of the machine’s paranormal behavior, which was likely broken suspension rods or damaged shock absorbers holding the inner tub in place. After watching 8 or 9 YouTube videos, I decided that I had the inner fortitude to de-demonize our beloved washing machine. And being thrifty, I wished to avoid the major capital expenditure of replacing the washer.I consider myself handy and even pride myself on the 65% success rate for fixing household appliances. Yes, I freely admit that past performance is no guarantee of success. However, since I was attempting to maintain my existing emergency fund, I ordered new drum springs; at 7 years old it seemed financially responsible to repair rather than replace the machine. Upon arrival of the rods, I subsequently installed them in a mere 3 hours (I like to think of myself as methodical, rather than speedy). With a screwdriver in hand, one bruised elbow, and my pride on the line, I separated the whites from the darks and ran a load. Success!Unfortunately, the clean clothes ran up against another obstacle. Our 10 year old dryer must have been jealous of the attention its utility counterpart received. What are the odds that both a washer and a dryer would malfunction in the same week? Call it correlated asset failure. In my house, in hindsight, the odds were pretty darn high. One appliance repair was manageable. Two was beginning to feel like collusion between utilities.To make matters worse, the washing machine was only functional for two loads. Just because you can purchase parts on the internet does not guarantee long term utility after installment, in essence rendering my original repair invalid. Sunken costs for a depreciating asset. In this case, I probably broke a plastic piece holding the inner tub while replacing the springs.Unfortunately, I was lulled into a false sense of security, and was outside the house when those diabolical mechanical fiends struck again. When I returned, the washer was in full demonic dance, this time mischievously thumping our 17 year old water heater. The water tank wanted no part of the dance, and promptly sprung a supply line leak. Great.In hindsight, advocating for a larger emergency fund balance would have been prudent for someone like me with a known 35% failure rate.I ran to the big box store to purchase a new pipe and some sealing tape, but silly me, I forgot to take measurements of the tank and valves. I called my wife in the parking lot to assist. My mistake was to ask her to check if the tank’s intake valve was functional. It was not, evident by her high pitched scream and the clear sound of water gushing. Note to self: remember to shut off the main water supply before asking the wife to help with water tank issues. Did I mention that our daughter’s future in-laws were coming to dinner the next day? In the end, we purchased a new water heater and were only without water for two days. We also purchased a washing machine, but it took roughly three weeks for delivery, as we required a difficult footprint size to fill the space occupied by the previous device. Our emergency fund survived, albeit at a lower level than anticipated. As a side note, I was able to fix the dryer, for the most part, so that a full replacement was not necessary. The experience taught me a few lessons. First, household financial risks may appear independent, yet often this is not the case. It was easy to fathom we had our unexpected events covered with our existing emergency fund. Yet compounding systemic appliance failures pushed the unexpected expenses towards our theoretical limits. Second, my father was only partially correct. Underwear is not a renewable asset.I should also think about establishing a separate Fruit of the Loom reserve account to accompany our current emergency fund. A decision my mother would have approved.Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
"I suspect I’m already paying for other people’s flood risk. For decades, my local permitting office has approved development on floodplains, with predictably costly results. I’m sure our insurance carriers have built that civic stupidity into everyone’s annual premiums."
"Sorry, the myth "the most important aspect of investment is asset allocation, not asset selection" must be challenged.
The idea that asset allocation is the single most important part of investing comes from a famous 1986 study by Gary Brinson, L. Randolph Hood, and Gilbert Beebower, which claimed that asset allocation accounts for more than 90% of a portfolio's return variability over time. ]
However, calling asset allocation the "only" or absolute most important factor is considered a myth or an oversimplification for several key reasons: Why the "90% Myth" Gets Questioned
Misinterpreting "Variability" vs. "Total Return": The Brinson study did not say asset allocation generates 90% of your profits. It meant that roughly 90% of the ups and downs (volatility/variance) of a portfolio's returns over time can be explained by whether you are in stocks, bonds, or cash—rather than which specific stock you picked.
The Power of Security and Manager Selection: Critics (such as active management research) argue that individual security selection—choosing great companies, managing active strategies, or finding "alpha"—is the true engine of outperformance and wealth generation relative to a benchmark. Owning a generic asset mix gives you market average returns, but picking the right underlying assets determines whether you beat or lag behind that average.
Narrow Spread Between Allocations: Backtests by analysts like Meb Faber have shown that the long-term performance gap between wildly different, complex asset allocation models is often quite small (sometimes under 2% per year), meaning tweaking your asset mix alone won't save a flawed savings rate or poor vehicle selection.
Real-World Concentration and Risk: Asset allocation is essentially diversification. While it controls systemic risk and volatility, it does not protect you from a broad market crash, and focusing too blindly on macro-asset splits can cause investors to ignore the quality, fees, and fundamentals of what they actually hold. Remember 2022? both your bond and stock funds went down together.
Systemic Shifts: Modern market dynamics—such as synchronized global sell-offs, inflation shocks, and changing correlations between stocks and bonds—have exposed the limits of static asset allocation models like the classic 60/40 portfolio. BND, US bond index had a terrible 5-10-15 year performance, averaging under 2%.
I KEEP PHYSICALLY active and exercise on a semi-regular basis. Maybe not as much as my wife suggests, but enough that I feel the burn during a workout, and experience those pesky muscle group aches the next day. However, there is one muscle that I should probably exercise more, and with greater fervor, especially now that I am retired.That muscle is the brain. In my humble opinion, the brain should be considered a critical retirement asset.I am keenly aware of my diminished mental acuity as I enter my third trimester of life. My ability to sort, store, and retrieve information has weakened. Furthermore, at two years into retirement, I find that I no longer push my brain muscles for hours at a time as I did during my working years. When I do push, my focus is shorter; my thoughts are not quite as deep. Where I used to swim deep with the fishes, I now wade shallow with the minnows.I joke with friends and colleagues that, as a former scientist-researcher-educator, my brain was my most critical piece of “capital equipment”. In reality, regardless of occupation or social status, the brain serves everyone as his or her most important asset for career placement, advancement, and success.There is irony in carefully protecting a financial retirement portfolio while paying considerably less attention to the biological asset responsible for managing it. Many of us pour over our spreadsheets to ensure existing monetary assets will support our retirement years. I suggest that just like any other valuable asset, the brain requires continued monitoring. I am certainly guilty of giving my fiscal portfolio more attention than I do preserving the cognitive asset required to maintain it. During my working years, brain “maintenance” was automatic; daily doses of research investigations, teaching and writing, kept this capital equipment asset exquisitely tuned. Now that I am retired, I find that much of the built-in capital expenditure for maintaining the brain is gone. I have this extraordinarily valuable piece of equipment lying around the house (upstairs) with no scheduled maintenance program. Recognition that I require increased brain maintenance may be the first step. Perhaps all I need is simply a continued re-investment; a minor amount of intellectual capital deposited every day might do the trick to keep my most important muscle asset from depreciating.I thought to start by fortifying existing neurons. My twins bought me a subscription to Spotify, a music service that has eerily learned my likes and dislikes all too well. Figuring to rekindle teenage memories of the ‘70s, I created playlists that included the earliest albums I owned. Curiously, I am able to recall all the words from favorite songs written by The Beatles, Elton John, and The Kinks. Unfortunately these exercises can backfire. Let’s just say that once Bee Gees tunes, or associated images of John Travolta dancing in tight bell bottoms, get into your head, no amount of cognitive therapy can force them out. On the flip side, some neurons simply left no forwarding address. Try as I may, I am unable to remember anything I learned in physics or calculus from that same decade. Those capital assets left no receipts; the intellectual ledger entries have been simply wiped clean from the grey matter processing center. The creation of new neural pathways remains a challenge. I try to stay mentally engaged. While my time spent reading is probably similar to when working, the breadth of subjects has expanded. Less pure science, and more science fiction. What I really need is a way to consistently exercise and strengthen my brain’s problem-solving circuitry.I’ve tried jigsaw puzzles, however, my color deficiency leads to more frustration than completed projects. Apps are fun, but become less engaging once the logical paths to successful completion have been mastered. I tried to learn a new language, but the slow progress made me depressed.There is an oft-cited figure that it takes 10,000 deliberate and focused hours to achieve mastery in any particular field. At a realistic pace of 2 hours a day, for 6 days a week, mastery in any new field chosen would take roughly 16 years. That’s a significant time-related investment, and that investment comes with an opportunity cost. Time spent mastering one pursuit is time unavailable for another. At my current stage of life, time may actually be the capital asset in the shortest supply.I began new hobbies, such as woodworking and hydroponic gardening. Each brings the challenge of new cognitive skills. Yet I don’t engage in those activities every day. Furthermore, it seems unrealistic that these activities will hold my interest intently for the time required to master these subjects. Indeed, the only constant activity I’ve kept since retiring is that of napping. So, I guess I am on track to be a nap master in another decade or two. I could speed the process by taking longer naps, but on the surface that seems to defeat the overall goal of strengthening mental muscle growth and cognitive conditioning. For now, I am beginning to realize that the overall goal may not truly be mastery of new skills at all. Rather I should focus on continued cognitive maintenance and investment. A little intellectual capital deposited every day may not make me an expert in anything new, but perhaps it will keep my most important capital biological asset from depreciating too quickly.Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
IT'S THAT TIME of year again, when college endowments report their results for the recently completed fiscal year. This year’s numbers were unusual and carry lessons for individual investors.For fiscal year 2026, which ended June 30th, some schools reported extraordinary returns. The University of North Carolina’s endowment reported a gain of nearly 38%. Washington University notched a return of more than 37%. And Stanford University’s endowment gained almost 32%.Those are strong numbers, but it was a year of haves and have-nots. The median return was a much more modest 16.1%, according to consulting firm Cambridge Associates. And some schools trailed badly. MIT’s endowment, which has historically been near the top of the leaderboard, returned just 10.3%.Why the disparity? The explanation, in short: SpaceX. Some schools—but not all—had invested in the company years before its public offering. Some had purchased shares directly, while others had exposure through venture capital funds. So when SpaceX held its IPO earlier this year at a valuation of nearly $2 trillion, these schools experienced windfalls. That explains the outstanding results at UNC, WashU and Stanford, and it explains why the median school, which had little or no exposure to SpaceX, put up much less dramatic results.What should we conclude from this? On the one hand, this seems to validate stock pickers’ argument that the right picks can make all the difference. It also seems to support those lobbying for a rule change to allow private funds into workplace 401(k)s. Advocates of this move talk about democratizing access to investments, and the impact of SpaceX certainly aligns with that argument.Despite some endowments’ success with this strategy, though, my recommendation is unchanged: For virtually all investors, I would still opt for the simplicity of index funds and would steer clear of private funds, including hedge funds, private equity and venture capital.When it comes to private funds, there are four fundamental challenges which are well understood. For starters, they’re expensive. The traditional private fund structure involves a management fee which is typically between 1% and 2%. On top of that, the manager collects a performance fee—usually 20% of the profits each year. Funds like the Robinhood Ventures Fund (ticker: RVI) offer access to a basket of private companies through a publicly-traded vehicle, and they’re similarly expensive. This fund charges more than 3%. In contrast, funds tracking the S&P 500 charge as little as 0.03%. So cost is one key factor.Private funds can also be tax-inefficient. Because they’re actively managed, the level of trading inside these funds can be significant. That leaves investors’ tax bills exposed to the whims of fund managers. A recent roundup by research firm Morningstar illustrates how investors in actively-managed mutual funds can face unpleasant tax surprises. Though the mechanism is different, the same risk applies to investors in private funds.Private funds also carry fundamentally more risk, because they aren’t required to undergo the same level of scrutiny as publicly-traded funds. That provides more room for malfeasance.And finally, private funds are generally illiquid, limiting withdrawals to periodic windows throughout the year. These restrictions have been problematic even for large university endowments, forcing them to sell investments at below-market prices. For individual investors, this sort of illiquidity could be an even larger problem. In my view, an asset that can’t be sold on demand has limited practical value, however attractive it may appear on paper.Those are some of the more commonly cited challenges with private funds. But this year’s endowment returns highlight another issue: The performance of private funds is highly variable, and that’s because the landscape of investments outside of public markets is so idiosyncratic. At the University of North Carolina, for example, half of the endowment’s returns last year came solely from its SpaceX stake. That was fortunate. But unfortunately, there’s no reliable formula to repeat that kind of success.It’s for that reason, I think, that endowment returns, on average, have been middling. According to data from the National Association of College and University Business Officers (NACUBO), the average college endowment has gained 10.0% per year over the past three fiscal years. In contrast, an investor in a simple publicly-traded stock-bond fund like the Vanguard Balanced Index Fund, would have earned 12.5% per year over that same time period.To be sure, endowments have delivered better returns than publicly-traded alternatives in other time periods. Over the past five years, for example, endowments in the NACUBO database have beaten that Vanguard fund by about one percentage point per year. The issue, though, is that there’s no pattern to these returns. If private funds start the year encumbered by high fees, tax-inefficiency and illiquidity, then they need to deliver returns that are that much better just to stay even. And there’s no guarantee that this will be the case.It’s for these reasons that I continue to recommend the simplest of investments for portfolios of all sizes.Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossmanand check out his earlier articles.
"If you believe accrued benefits are reduced before age 67-+ then indeed 67 if the full retirement age. However, no pension plan presents a retirement date beyond which you accrue more benefits other than the standard calculation using service and earnings. To me that says the full retirement age under SS is actually age 70 and thus early retirement causes reduced benefits not added benefits beyond age 67-+"
"Thanks, Mark. My data can't test that idea, since the call sample only starts in January 2024, but it does show the noise missing in both directions so far: a recession came up on 8.2% of calls in early 2024 and on 22.2% in April to June 2025, and neither time did one follow. Your chocolate is a good example of what executives now mean by affordability: the product changes so the price can hold."
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- Misinterpreting "Variability" vs. "Total Return": The Brinson study did not say asset allocation generates 90% of your profits. It meant that roughly 90% of the ups and downs (volatility/variance) of a portfolio's returns over time can be explained by whether you are in stocks, bonds, or cash—rather than which specific stock you picked.
- The Power of Security and Manager Selection: Critics (such as active management research) argue that individual security selection—choosing great companies, managing active strategies, or finding "alpha"—is the true engine of outperformance and wealth generation relative to a benchmark. Owning a generic asset mix gives you market average returns, but picking the right underlying assets determines whether you beat or lag behind that average.
- Narrow Spread Between Allocations: Backtests by analysts like Meb Faber have shown that the long-term performance gap between wildly different, complex asset allocation models is often quite small (sometimes under 2% per year), meaning tweaking your asset mix alone won't save a flawed savings rate or poor vehicle selection.
- Real-World Concentration and Risk: Asset allocation is essentially diversification. While it controls systemic risk and volatility, it does not protect you from a broad market crash, and focusing too blindly on macro-asset splits can cause investors to ignore the quality, fees, and fundamentals of what they actually hold. Remember 2022? both your bond and stock funds went down together.
- Systemic Shifts: Modern market dynamics—such as synchronized global sell-offs, inflation shocks, and changing correlations between stocks and bonds—have exposed the limits of static asset allocation models like the classic 60/40 portfolio. BND, US bond index had a terrible 5-10-15 year performance, averaging under 2%.
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