Friday, July 31, 2009

Poor Harvard

What grew even faster than Harvard's endowment? Harvard's spending, writes Nina Munk in Vanity Fair: And then the bottom fell out of the market. "At Harvard … adjusting to the end of the gilded age, the champagne age, is proving especially wrenching …."

Famous last words

Di Fara Pizza, a Brooklyn Legend, Raises its Price to $5 a Slice reports NYTimes.com. The price was $4 per slice in June. A 25% price hike during a recession? Seems risky to me, but according to the story the pizza is so unusually good that they are having no problem selling all that they make. All the pizza is made by one person, the owner, Domenico DeMarco, who is 72 years old.

The owner's daughter, Margaret Mieles, who manages the business, was asked if the price hike was temporary.
“We will never, ever lower the price,” Mrs. Mieles said. “It can only go up. It can never come down.”
A nice policy if you can enforce it.

Thursday, July 30, 2009

Tax Evaders Flock to IRS

In all of last year, around 100 affluent Americans decided to come clean about their undeclared income from off-shore accounts. In the last week, The Wall Street Journal reports, 400 tax evaders have fessed up.

Wednesday, July 29, 2009

Remember Travelers Cheques?

When trust-fund babies went to Europe in the summer of 1930, they could carry American Bankers Association Cheques. According to this ad, those were also the days when a Scot might buy a Detroit-made motorcar.

The Trouble With Target-Date Funds

A typical mutual fund-of-funds for people retiring in 2010 lost about 20-25% of its value last year, depending on who's counting. The percentage of equities in those funds varied widely. Do target-date funds need more regulation? Better disclosure?

Or is the market for target-date funds not really there?

Three for the money

People nearing retirement appear to fall into three investment groups:

The well endowed. Presumably the smallest group, in retirement the well endowed plan to emulate the followers of Tiger 21, withdrawing no more than 3% per year from their capital and accumulated income. They need not alter their long-term investment programs, except to put aside enough cash to live on for three to five years. They can keep on investing significantly in equities, even a hedge fund or two. No need to make changes at retirement merely because their time horizon drops from 25 to 24 years, or from 30 to 29.

The cash-outs are the largest group. They crave predictability. If Joe the Boomer has around $375,000 in his 401(k) five years before retirement, he doesn't want to take the risk necessary to retire with maybe $600,000. He fears he might wind up with only $200,000. Joe wants to be reasonably certain he'll retire with about $400,000 so he can buy a little business, an annuity, whatever. For Joe even the most conservative target-date fund looks too risky. Five years before retirement, he probably needs to have much of his wealth in cash or near cash. And he needs to cashify the rest as retirement moves even closer.

The spend-downs intend to draw steadily on their wealth over their retirement years – dining well the day before they die, then expiring broke. Retirement planners and most target-date funds seem to, well, target this group. But what if the target is illusory? Are spend-downs really so numerous? Is the group as large as it was a few years ago, when investing was less worrisome? And who says they need a special investment strategy? Why can't they follow much the same course as the well endowed, except for spending 4% or 5% each year?

Mind over money

A further complication: These three groups cannot be identified or ranked by net worth alone. Wanda may retire with only $500,000, but she may choose to treat it as her lifetime endowment. Wally, with $4 million. may insist he can't possibly live on less than $200,000 per annum.

Tentative conclusion: The situations and attitudes of people nearing retirement are too nuanced, too varied, to be served by prepackaged investment programs.

If so, that's bad news for vendors of target-date funds.

On the other hand, it could be good news for individuals and firms offering custom-tailored investment advice.

Feedback loops

In Hurrying Into the Next Panic? Paul Wilmott comments on the phenomenon of split-second trading that JLM mentions below.

Was portfolio insurance really the cause of Black Monday in 1987?

Friday, July 24, 2009

Wall Street's Split-Second Traders

Last week we called your attention to Toxic Trading on Wall Street. Today's New York Times gives the subject front-page coverage.

Could Olive Watson's “Daughter” Yet Inherit?

Remember the tricky estate planning case of Olive Watson, granddaughter of Thomas J. Watson, Sr., founder of IBM?

In Maine, one of the few states permitting adult adoptions, Olive had adopted her lesbian lover, Patricia Ann Spado. The couple split up, but after the death of her adoptive grandmother Patricia sought a share of the Watson fortune.

At the urging of two trustees of Watson trusts, a probate court annulled the adoption. Patricia pursued her case to the Maine Supreme Court. Yesterday the Supremes ruled that the adoption stands.

Bridge: “Wall Street in Miniature?”

Bear Stearns CEO Jimmy Cayne was a whizz at bridge. So was Bear-Stearns co-president Warren Spector. In The New Yorker, Malcolm Gladwell muses on how bridge may have contributed to their undoing.
It makes sense that there should be an affinity between bridge and the business of Wall Street. Bridge is a contest between teams, each of which competes over a “contract”—how many tricks they think they can win in a given hand. Winning requires knowledge of the cards, an accurate sense of probabilities, steely nerves, and the ability to assess an opponent’s psychology. Bridge is Wall Street in miniature, and the reason the light bulb went on when Greenberg looked at Cayne, and Cayne looked at Spector, is surely that they assumed that bridge skills could be transferred to the trading floor—that being good at the game version of Wall Street was a reasonable proxy for being good at the real-life version of Wall Street.

It isn’t, however. In bridge, there is such a thing as expertise unencumbered by bias. That’s because, as the psychologist Gideon Keren points out, bridge involves “related items with continuous feedback.” It has rules and boundaries and situations that repeat themselves and clear patterns that develop—and when a player makes a mistake of overconfidence he or she learns of the consequences of that mistake almost immediately. In other words, it’s a game. But running an investment bank is not, in this sense, a game: it is not a closed world with a limited set of possibilities. It is an open world where one day a calamity can happen that no one had dreamed could happen….

Thursday, July 23, 2009

Pay-Go passes in the House

Tax Notes Today ($) reports that "pay as you go" legislation passed in the House by 265-166. This is an attempt to implement an Orwellian forced tax hike process. Every year the Congress has added a one-year inflation adjustment to the AMT, because no one really wants to impose the AMT on the middle class. Under Pay-go, every year they are then "required" to raise someone else's taxes instead, to offset the "revenue loss" from a tax that they never intended to impose.

What a country!

But the important point for estate planners, the reason for this post, is that an extension of the 2009 estate tax rules has been specifically exempted from Pay-go (a larger exemption would not be). That makes the extension more likely--it was already likely. The Senate is not as excited about Pay-go as is the House.

The Wild Card in Jackson's Estate?

As other blogs have noted, the wild card in Michael Jackson's estate (see preceding post) may be the Jackson name itself.

The good news: Jackson's posthumous "right of publicity" could be worth a fortune.

The bad news: The estate tax would be humongous.

Might Jackson's heirs have been better off had he died, like Marilyn Monroe, as a resident of New York, where the right is not descendible?

Wednesday, July 22, 2009

What is Michael Jackson's estate worth?

If ever there was a case of hard-to-value estate assets, this is it. Although pinning down a number may be difficult, there's no doubt that there's a lot of value at stake.

The New York Times reports that Jackson Assets Draw the Gaze of Wall Street. The main asset is Jackson's 50% interest in the Sony song catalog that includes everything by The Beatles and lots more good stuff. This alone might be $500 million, according to The Times. Then there's Michael Jackson's own music, owned by Mijac, which could be another $100 million to $200 million. Yes, there's also a mountain of debt to cover, but the net estate could easily be $300 million, which would generate a federal estate tax bill of $135 million.

The estate is so far resisting all offers, saying that no assets are for sale. But I wonder if they have the cash to meet their tax obligations?

Tuesday, July 21, 2009

Follow up on sunspots

Back in March I commented upon the surprising lack of sunspots, and wondered what implications there might be for global warmists. Could the missing spots presage a cooling period? Like the one we are experiencing right now in the northern U.S.?

The New York Times has now picked up the story. Interestingly, they don't dismiss the potential relationship of sunspots to cooling. The Maunder Minimum overlapped the "Little Ice Age," after all. However, the scientists quoted are confident that we are not on the verge of an extended spotless period. Maybe something with very low maximums, however, along the lines of the Dalton Minimum.

What were the scientists saying in 2006 in projecting the current sunspot cycle? From the Times:

On Monday, scientists predicted that the next of these cycles would start as much as a year late — in late 2007 or early 2008 — and would be 30 percent to 50 percent stronger than the last one.
So the current cycle is 2.5 years late so far, and now we think it will be much weaker, not stronger.

Perhaps a bit more humility is called for when we discuss global climate change and man's theoretical role, given that climate models don't seem any better than our sunspot models?

New Legs for an Old Marketing Tool?

Morgan Stanley Smith Barney, the new wire-house colossus, announced it would stress financial planning services, including estate planning. Sure enough, the other day the flier at left arrived in the mail.

To trust companies and bank trust divisions, use of estate planning as a marketing tool couldn't be more old hat. If MSSB thinks the tool is valuable today, maybe trust bankers should get moving and throw their hats back into the ring.

Marketing via estate planning should heat up later this year, when Congress acts to prevent the estate tax from expiring (and surely adds a few new twists). Corporate fiduciaries who want to be seen as a source of estate-planning help in December had better promote themselves now.

If the company were paying me sales commissions, I'd suggest that those not already using Merrill Anderson's newsletters and brochures should start immediately. What the heck, I'll suggest it anyway.

Monday, July 20, 2009

Old People + Will Changes = Estate Battles

Daily news stories report on the trial of Anthony Marshall, charged with bullying his mother, Brooke Astor, into making will changes that could eventually benefit the daughter-in-law she disliked. Similar estate battles are not unknown, as John Eligon reports in this New York Times roundup.

Can or should more be done to protect people in their twilight years – to shield them from avaricious caregivers or greedy relatives? (The protection, in these cases, is really for the beneficiaries named when the elderly person was still functioning on all cylinders.)

"Redefining ways to deliver trusted advice"

The PricewaterhouseCoopers: Private Banking/Wealth Management Survey 2009.

Also redefining how to present information on the web.

Saturday, July 18, 2009

Could the federal government tax Roth IRA earnings after all?

Ron Lieber at NYTimes.com thinks so, and warns against rushing in to convert one's IRAs to Roth IRAs come January. In addition to applying an income tax or perhaps a capital gains tax on Roth IRA distributions, he raised the possibility of an "excess accumulations" tax.

This would represent a remarkable break of faith with the taxpayer, even bigger than when Social Security benefits became partially taxable.

Friday, July 17, 2009

Has Michael Jackson Made Living Trusts 'Cool'?

Kiplinger's says Michael Jackson made four smart estate-planning moves, and one of them was a living trust.

What's the difference between a surtax and another tax bracket?

No, it's not a riddle, it's a serious question. Why is the partial financing of health care reform being pitched in the form of a surtax on the high incomes instead of the simpler, easier to calculate approach of just adding new tax brackets at the high end? Is there some political advantage to calling it a surtax?

The only thing that occurs to me is that tax brackets are indexed for inflation, and perhaps this new surtax will not be so indexed. The other possibility is that a new tax bracket likely would not apply to capital gains, while a surtax might.

Thursday, July 16, 2009

Decline of the Demi-Rich

Wealth managers with clients worth more than $5 million should cherish and protect them. They're an endangered species. According to a Phoenix Marketing International study, U.S. households with investible assets of $5 million or more fell from 823,000 in June, 2008 to 675,000 as of last month. That's an 18% drop, far sharper than the 8% drop in high-net-worth households overall.

Note: Despite the Investment News headline, relatively few of those 675,000 households are truly rich, much less superrich. Even with the current deflation, a rich lifestyle generally requires at least $20 million; superrich, at least $100 million.

But even the formerly superrich can adjust to changing circumstances. Mr. Madoff's living expenses at his new home in North Carolina are said to be quite affordable..

Yes, P. T., There's Still One Born Every Minute

What's that, weary wealth manager? You've come to the conclusion that the average investor is clueless? Judging by those who bid $1 or more for worthless shares of the old GM, apparently in the belief they were shares in the new, privately-held company, you're right.

Wednesday, July 15, 2009

Irate Investor Launches Ad Campaign

What happens when a well-heeled investor loses millions because of his private bank's perhaps ill-considered recommendation?

In the case of Keith Mills, wealthy Brit, he launches an ad campaign berating Coutts & Company, (aka "Bankers to the Queen") for putting a sizable chunk of his capital into … AIG bonds!

Click on the thumbnails to see larger images of the ads. See also The Coutts AIG Action Group site.

The Joys of Willful Ignorance

Data from The New York Times:

6
Number of times Apollo astronauts landed on the moon, starting 40 years ago this month.

6
Percent of Americans surveyed who believe no one ever set foot on the moon; it was all a hoax.

Harrison Schmitt, the pilot of the lunar lander during the last Apollo mission, suggests that the nonbelievers demonstrate the failure of American schools. But another comment from Schmitt seems closer to the mark: “If people decide they’re going to deny the facts of history and the facts of science and technology, there’s not much you can do with them.”

Some people feel the modern world is spinning too fast; they want to get off. Fear of the unknown leads to willful ignorance. That's why some of us won't open our credit card bills or our 401(k) statements.

Personally, I choose to believe that CDO's and credit-default swaps never existed. (Come on, now, is it plausible that adult men and women would have fallen for that stuff?)

Tuesday, July 14, 2009

I'm shocked

I'm shocked to find myself in agreement with Eliot Spitzer, writing in Slate Magazine about the catastrophe facing state and local governments: pension obligations gone wild while tax revenues are cratering.

Key point:
In New York alone, where the state pension fund lost $44 billion, or about 28 percent of its value, during the last year, local government contributions to the pension fund are going to have to triple over the next six years to make up the shortfall. Local governments will have to supply an extra $5.5 billion per year. That tax burden alone—traditionally derived to a great extent from the property tax—could break the backs of many communities.
Thanks for the heads up, Eliot. Too bad you didn't address that problem when you had the chance.

The recession is over!

Reports Daniel Gross at Slate Magazine, reviewing the predictions of two firms that analyze business cycles. They acknowledge the rotten employment picture, but suggest that jobs will be coming back by the end of the year.

Pardon my skepticism. I'm blogging this now so as to be able to refer back to it in six months.

Wall Street, 1907

In 1907, ten years before Childe Hassam painted Brooke Astor's "Flags, Fifth Avenue," he produced this impression of the financial district – a view up Broad Street to Wall Street and Federal Hall. (Click on thumbnail for larger image.) Lots of people in the street in those days. Not surprising – the Curb Exchange didn't move indoors until the 1920s.

1907 was the year of the Panic, the crisis that led to J. P. Morgan taming the trust companies.

Tourist note: I found the painting on Teri Tyne's Walking off the Big Apple. Her strolling guide to New York City should appeal to tourists and new residents alike.

Monday, July 13, 2009

Elk, Wall Street Bankers and the Average Investor

Economists may learn more from Charles Darwin than Adam Smith from now on, writes Cornell's Robert H. Frank.

Frank points to the elk. Mutations have resulted in male elk with antlers spreading five feet or more. These weapons of broad destruction help in fights with other males for mates – but they place the elk in deadly peril the first time predators chase him into the woods. (Could that help explain why the Eastern Elk, portrayed here by Audubon, is now extinct?)

Frank doesn't quite single out Wall Street bankers and their financial engineers as similarly maladapted, but one gets the picture: The ability of many to make lots of money individually did not assure their collective survival.

Even average folks may be ill-adapted to the investment world, as demonstrated by Mark Hulbert. We've evolved enough to see the theoretical advantages of timing the market, but not enough to realize we can't actually do it.

Hulbert cites a Morningstar study of the giant Growth Fund of America. In the bear-ridden 12 months through May, an investor holding the fund would have lost 31.4 percent. But "the actual return for the average investor in the fund was worse: down 32.7 percent.… The reason for this bigger loss was that the average investor had more dollars invested in the fund when it was declining than when it was rising."

The gap of 1.3 percentage points echoes the findings of an earlier, broader study. From 1991 through 2004, the tendency of mutual-fund investors to buy high and sell low reduced their average returns by 1.6 percentage points a year.

As for the presumably sophisticated investors who put money in hedge funds, Hulbert points to a study showing that market timing costs them a bundle: "The dollar-weighted return of the average hedge fund is 4 percentage points a year below its time-weighted return."

Saturday, July 11, 2009

Toxic Trading on Wall Street

It's a mean, mean financial world, where predators operate in microseconds; individual investors need all the help they can get.

So we learn via John Mauldin who calls attention to a white paper written by Themis Trading, called "Toxic Equity Trading Order Flow on Wall Street."
Basically, they outline why volume and volatility have jumped so much since 2007; and it's not due to the credit crisis. They estimate that 70% of the volume in today's markets is from high-frequency program trading. They outline how large brokers and funds can buy and sell a stock for the same price and still make 0.5 cents. Do that a million times a day and the money adds up. Or maybe do it 8 billion times.••• This is a game played out in microseconds.

The retail world doesn't get to play. This is a game only for big boys who can afford to pay for the "arms" needed to fight this war. But the rest of us pay for the game, as that half cent is like a tax on transactions, not to mention the increased daily volatility, which skews pricing.

"Filing Chapter Heaven"

In the WSJ Brett Arends uses the term "filing Chapter Heaven" to enliven a report on how the Great Recession may prompt retirees to buy annuities and die broke. Sounds like a win-win situation – stable income for the retirees, freedom from the worries that go with investing an inheritance for their kids.

Friday, July 10, 2009

One Way to Inherit a Dukedom

Kind Hearts and Coronets, a masterpiece of English film comedy, debuted sixty years ago this summer. It's the movie that asks the question, "How can a draper's assistant become the 10th Duke of Chalford?" Answer: by practicing the gentle art of murder on the seven members of the aristocratic D'Ascoyne family who stand in his way. The Telegraph salutes the occasion with a tribute to the film's writer and director, Robert Hamer.

Hamer drank himself to death, but what a legacy he left us: a movie in which young Alec Guinness portrayed not only the murderer but all seven of the murder victims as well.

Thursday, July 09, 2009

The Emperor's New Securities

Last December we noted that a Connecticut bank had been drawn into the Madoff scandal. Now the holders of more than two dozen retirement accounts are suing Westport National Bank, which served as custodian of the $60 million in their accounts. Except, of course, there was no $60 million – everything was invested with Madoff.

Madoff's operation is still a puzzlement. Both fund-of-fund managers and direct investors seemed to think of it as a hedge fund. Yet hedge-fund investors own partnership interests or shares or something. Madoff investors owned nothing; they merely opened brokerage accounts with him.

The New York Times succinctly describes the problem of custodianship that resulted:
[Westport National's custodian] agreement … indicates that the bank would take custody of whatever investments Mr. Madoff made on the customers’ behalf. For example, the agreement specifically requires the bank to adequately document the customers’ ownership of investments made with the Madoff firm “and held by the bank as custodian.”

In fact, there was nothing for the bank to hold since Mr. Madoff never bought any securities for his investors, according to the bankruptcy trustee ….
You can read the entire custodian agreement here.

Wednesday, July 08, 2009

Another “Dis-Astor”

The Daily News reports Chaos in the Courthouse when Anthony Marshall, Brooke Astor's son, fell today when taking a bathroom break. One can't help feeling sorry for the elderly Marshall. As we've observed before, "The Case of the Astor Will" is woefully miscast.

And yet … Marshall's reported conduct toward his mother could appear mean and avaricious in the extreme. He sold one of her favorite paintings, Childe Hassam's "Flags, Fifth Avenue (1917)," allegedly telling her that she needed the money. A dealer paid $10 million. Marshall awarded himself a $2 million "commission."

Art dealers customarily pay no more than half the price they hope to get for a work. The dealer reportedly resold "Flags, Fifth Avenue" for over $20 million.

Tuesday, July 07, 2009

Nominee for most misleading headline in 2009

From Bank Investment Consultant:

Clients Prefer Proactive Advice to Beating the Market

We'd love to believe that's true, because that would take all the pressure off in delivering satisfactory investment services, wouldn't it? But a scan of the article suggests that the clients said something very different, they were not presented the choice the headline implies.

A survey sponsored by MetLife, one that looks like it might have been skewed to favor large insurance companies, revealed that 45% would choose a financial advisor who would provide products that protect them against market risks. Only 18% said that they wanted an advisor who could "recommend products that can generate greater returns, despite greater risk."

I'm pretty confident that if the survey simply asked, "Would you like to beat the market with your portfolio returns?" they'd get a 100% affirmative.

Just to calibrate the demographics of the respondents, 29% said that if they received a windfall of $50,000 the first thing that they'd do is pay down credit card debt (the number one answer). Only 5% said that their first move would be to buy a investment product.

Monday, July 06, 2009

Seniors! Beware of Financial Alchemists

The Alchemist, via Wikimedia Commons
"[C]reating investments that promise investors both gains and protections is essentially like trying to work alchemy in the financial markets," observes The Wall Street Journal.

Despite last year's setbacks, the alchemists are back in their laboratories, seeking to turn derivatives into gold and stocks into investments that always go up.

The Journal reports they hope to sell their inventions to seniors – retirement-age investors.

(Advice from this senior to his peers: "Be afraid. Be very afraid.")

Custodianship

When I was a lad, many prudent investors kept their stock certificates in safe deposit boxes and took pains to clip their own bearer-bond coupons. Only the truly monied treated themselves to the convenience of having a trust institution as custodian.

Despite marketing efforts like the 1964 Chase nest egg ad shown here, custodianship remained a dull subject for decades – until Mr. Madoff reminded people of how expensive a brokerage account can be.

Sunday, July 05, 2009

How Banks Make Money These Days

"It's the fees, stupid," according to data from Marketwatch:
Late fees, loan-origination fees, over-the-limit and overdraft charges helped generate 53% of banking-industry income in 2008, according to R.K. Hammer, up from 35% of income in 1995.

Thursday, July 02, 2009

Tax and Trust Planning, 1936

We will get around to a post on Earl MacNeill's two estate planning books – maybe next week. Meanwhile, look what turned up in a December, 1936 issue of the Cornell Alumni News:
BOOKS
By Cornellians

TO SAVE TAX COSTS
Adjustments to Minimize Taxes. By
Earl S. MacNeill '15. Trust Department,
The Continental Bank and Trust Company,
30 Broad Street, New York City.
This useful booklet illustrates various
plans for reducing the payment of taxes
by the establishment of trusts. With
hypothetical cases it indicates ways of
lessening the effect on an individual's income
of the new tax on corporate surpluses,
of using insurance as an automatic
offset to estate taxes, of setting up a life
insurance trust to avoid Federal and
State taxes which apply to life insurance
proceeds in excess of certain statutory
exemptions, of saving estate and gift
taxes by gifts anticipating increasing
values, of making savings by systematic
giving, and of ascertaining the ideal
ratio of gifts and testamentary estate
for maximum tax savings.
It includes also non-technical discussion
of such matters as gifts made in
contemplation of death, reservation of
control of trust property, reversion of
principal to the donor, establishment of
the right in another to terminate a trust,
the giving of trust income to dependents,
the valuation of large blocks of securities,
costs of trusts, and the necessity of employing
professional advice in setting up
trust plans. Appended are convenient
tables of gift taxes and Federal and state
estate and individual income taxes.
The author is assistant trust officer of
The Continental Bank and Trust Company
of New York. Stephen L. Vanderveer
'08, vice-president of the Bank,
writes that the booklet "is in great
demand."—A. M. P. Ί8
Continental was absorbed into Chemical Bank in 1947. Eventually Chemical merged with Chase and took the Chase name, which survives as the "brand" for the retail banking arm of JP Morgan Chase.

The Most-Hated Tax?

You know how most people (Messrs. Gates and Buffett excepted) feel about the death tax. Imagine how they feel about the other transfer tax – the one Uncle Sam expects you to pay while you are still above ground.

The subject of federal gift tax came up at Tony Marshall's trial yesterday. Brooke Astor, his mother, had signed a letter in August 2003 authorizing him to receive a $5 million gift from her. In the letter she also agreed to pay gift tax on the $5 million.

As The New York Times reports, the $5 million gift looked a lot smaller by the time it was reported on Mrs. Astor's gift tax return for 2003.

Wednesday, July 01, 2009

How the Rich Stay Rich

As every investor knows, the first rule for making money is not to lose money. Last year that was a tough rule to follow, especially for investors in mutual fund packages known as target date funds. Funds targeting a 2010 retirement date declined an average of 25%. Some lost 40%.

Investors with seven-figure portfolios were far more successful in limiting their losses, according to a survey done by Richard Day Research for Fidelity Investments:

High-net-worth individuals who manage their own investments limited their 2008 losses to an average of 18%, compared with a 38.5% drop in the S&P 500.

HNWI's who relied on financial advisers did even better, darn near breaking even. Their losses were limited to a mere 4%.

Wealth managers, you couldn't ask for a better illustration of the value of professional investment guidance!

Unless, perhaps, it's too good. An 18% loss sounds plausible for a reasonably conservative mix of stocks, bonds and cash last year. An average loss of only 4% is something else again.

When something sounds too good to be true . . .