Time to review the latest cutting-edge academic research, as discussed in our country’s leading business newspaper. A report in the Wall Street Journal from Monday brings us two items that expand our understanding of that mysterious beast known as the stock market.
The first item is a recently released report from the Investment Company Institute (the trade group for mutual fund companies) which revealed that the average mutual fund investor’s willingness to take risk is lower now than it was two years ago before the market experienced its well publicized unpleasantness.
It is a report that is just chock full of enlightening insights. A person only needs to skim the chart captions to learn a lot. Turns out, “Tax-Deferred Accounts Are A Popular Way to Hold Mutual Funds.” And “Fund Performance Is the Most Important Factor Shaping Opinions of the Fund Industry.” Further, “Mutual Fund Industry Favorability Rises and Falls with Stock Market Performance.”
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[Today’s Thursday re-run first ran October 6, 2009.]
There’s a good post today at Wise Bread making the argument that going to college just for the learning doesn’t make sense. In a nutshell, the post makes the case that, with only some peculiar exceptions, a person can learn 
stuff just as well and a lot more cost effectively on their own. I couldn’t agree more.
Of course, a person should probably go to college anyway. It’s just that learning things is not, per se, reason enough to spend four years and a modest fortune in tuition. There are good dollars and cents motivations for college and keeping a clear head about them is important.
(I haven’t researched this, but I write this blog under the assumption that my readership amongst high schoolers is zero. So to a certain extent this discussion is, you will pardon the expression, academic. Perhaps there are parents of high schoolers reading.)
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Recently I mentioned, almost in passing, a SmartMoney item that alleged that relatively young used cars were no longer the bargain they once were and that in some cases a new car is actually cheaper. This inspired considerable commentary, much of it of 
the thoughtful and fact-based variety.
The relative prices of new and barely used cars is a bit more significant an issue than it may at first appear. Conventional wisdom, which until recently I shared with some certainty, is that new cars depreciate violently the moment they become used ones. The consensus seems to be that they lose something like 30% of their new value.
That sort of instant depreciation underlies the argument that used is, in general, a better deal because people place an irrational premium on the new status of cars and attach an irrational stigma to used ones. If the instant loss of value turns out to be untrue, if it turns out that young used cars are only a little cheaper, then perhaps the larger argument that used cars are the smart way to go stops making so much sense.
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The latest manufactured outrage to fill the media and blogosphere is that Social Security will not have a cost of living adjustment in 2011. This is only the second time this has happened in the 35 years that cost of living adjustments (COLAs) have been in place. The other time was in 2010.
The AP led off its reporting on this tragedy with:
More than 58 million retirees and disabled Americans will have to go another year without an increase in their Social Security benefits, the government is expected to announce this week.
The blog WalletPop, always a little more colorful, started its post thusly:
The prediction from scholars that the Social Security Administration will announce zero cost-of-living adjustment, or COLA, to Social Security recipients in 2011 is a blow that many older and disabled Americans can ill-afford.
I think that they meant that the lack of a COLA, not the prediction of one, is an ill-affordable blow. But apparently, it is an even wider problem.
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The other day The Wall Street Journal introduced me to a new word. From German, it is fremdschämen, meaning “a feeling of cringing embarrassment for the actions of others.” If only to discuss reality TV shows, English really needs 
to adopt this one. We can spell it without the umlauts. It is pronounced something like FREM-shame-in.
I bring this up because there is a minor scandal brewing that has just inspired fremdschamen in me. The Consumerist has taken to calling it the Foreclosure Fracas. Wednesday’s update on it in The New York Times began:
The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.
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The first item is a recently released report from the Investment Company Institute (the trade group for mutual fund companies) which revealed that the average mutual fund investor’s willingness to take risk is lower now than it was two years ago before the market experienced its well publicized unpleasantness.
Investing, Media | Frank Curmudgeon | 
October 15, 2010 11:59 am | 
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