I quite enjoyed James Kwak's recent exercise in retirement planning. Plugging in various possible savings rates and investment returns, Kwak explores what retirement might look like for a hypothetical youngster who expects to retire as a 65-year-old in 2051.

One of the major lessons of Kwak's piece is the impossibility of investing out of the hole created by a low savings rate. Even with rates of return, and starting to invest at the tender age of 22, investing at the national savings rate of 2.4%-3.6% (the estimate varies according to the time period selected) won't lead to anything more than a supplemental portfolio. Forget about a nest egg that can replace Social Security for meeting basic needs, or combine with Social Security to make for a dream retirement. It ain't happening.   More 

The fund industry daily Ignites informs me via my morning e-mail: "Advisors Not Buying ETF Hype, Sticking with Active Funds." That's curious in that every month, ETFs attract more assets, Morningstar's ETF coverage gains more readers, and I hear from I don't know how many advisors who have questions about ETFs, because they're incorporating them into their practices.

So I read the article. "In a survey of more than 400 advisors, Cerulli found that nearly 45% said they prefer using actively managed funds in their clients' portfolios rather than primarily passive ETF products."

Silly me, I had thought the elections were over.   More 

In college, everybody knew that Stevie was the smartest guy around. He wowed them in the honors Shakespeare seminar, beat the math majors at their own game (eventually picking up a math degree of his own, just for the fun of it), and was outright brilliant in his chosen field, economics. By the time he was a senior, he had outstripped the undergraduate curriculum and was taking graduate courses under the tutelage of the previous year's Nobel Laureate.

And then, he quit. Abandoned all plans of becoming an economist, deciding instead between law school (Harvard, naturally) or an advanced degree in computer science (MIT, naturally). I asked him, why? He had been so excited about economics, since the first day as a callow, pimpled freshman.   More 

In recent months, I've received several e-mails that read like this:

Dear Morningstar,

I called Prominent Fund Company because your data did not match what it is publishing about its really big fund. The Person on the Telephone for Prominent Fund Company told me that 'Morningstar always gets our funds wrong.' Why does Morningstar continue to make these type of mistakes?

Signed - A concerned Morningstar subscriber

The reality, of course, is that the 2,400 people at Morningstar haven't gone AWOL, permitting basic data about a really big and really important fund to be incorrect month after month after month. The issue lies instead with the very reason that Morningstar exists: Different fund companies use the same words in different ways.   More 

If there was one abiding lesson to come from 2008, it was that buy-and-hold strategies based on long-term strategic allocations had failed. They were the product of a bull-market mindset. Rather than a static policy, investors need a flexible investment approach that recognizes current market and economic conditions, and which responds accordingly.

Or so I have been told, at conferences, and on television, and in Internet articles, and pretty much everywhere, as far as I can tell. Morningstar's own Investment Conference this past May had not one but two panels that poked at the conventional wisdom.   More