Here is a WealthThought focused on the personal finance side.
Somebody may be trying to return property to you or refund money that they owe you!
A few months ago I received a letter informing me that I had several unclaimed property accounts for a pretty nice little sum. In other words, several parties had attempted to return money to me and were unsuccessful. I have never received a letter of this kind and I was very interested to find out more.
I called the company who sent the letter and they confirmed that people were trying to return money to me and that they would retrieve it for a fee. The fee was small, but now I was starting to get skeptical. I ended the phone call and set out to research more facts about unclaimed property. There are many reasons why someone may have unclaimed property. In my case, I had moved several years ago and the parties simply could not reach me. After a period of time, unsuccessful attempts to refund money to its rightful owner require the organization to send it to the State until it is claimed. You do not need a third party to help you find unclaimed property that you may have. You can do a search right from the following site here in California without using a middle man.
When you do your search, make sure you are mindful of the different ways people can identify you. For example, if you are married, do a search with both your married and maiden names. Once you find unclaimed property owed to you, by using this source you can retrieve your property without paying a fee. You simply fill out their forms, send them to the state, and check back on the site to keep track of the status of your claim. This is fun and you never know. You may get lucky. An old health insurance provider may be trying to refund a premium you overpaid or a relative may have left you part of their estate. Happy searching!
Here is the California link http://scoweb.sco.ca.gov/UCP/Default.aspx
Tuesday, July 5, 2011
Thursday, June 9, 2011
WealthThought2
Understanding a key limitation to Modern Portfolio Theory.
When Harry Markowitz introduced his Modern Portfolio Theory in 1952, it revolutionized portfolio design forever. MPT explores the concept of maximizing portfolio return for a given level of risk. The theory is as relevant today as it was in 1952. A deep understanding of its elements requires a strong competency of various statistical mathematical principles. One of the key metrics often used when Portfolio Managers discuss the efficiency of their design reveals a limitation of the theory itself.
Standard Deviation is used to measure the expected volatility of a given portfolio. MPT assumes that rational investors should prefer the portfolio with the lowest standard deviation and the solution with the tightest range of variance versus the one with the widest swings in performance. Here is where it gets a bit tricky. MPT also assumes that investors have quadratic utility which means that they have an equal preference for the upside range of the standard deviation as they do to the downside range of the standard deviation. Equal preference for negative returns and positive returns is not rational. Investors will tell you that they have a much greater preference for the upside range then they do for the downside range. I will discuss this bi-linear utility in future WealthThoughts.
In spite of this limitation, MPT remains the core framework for portfolio design in the modern era. We will continue to study how mathematicians improve the application of this time tested theory.
When Harry Markowitz introduced his Modern Portfolio Theory in 1952, it revolutionized portfolio design forever. MPT explores the concept of maximizing portfolio return for a given level of risk. The theory is as relevant today as it was in 1952. A deep understanding of its elements requires a strong competency of various statistical mathematical principles. One of the key metrics often used when Portfolio Managers discuss the efficiency of their design reveals a limitation of the theory itself.
Standard Deviation is used to measure the expected volatility of a given portfolio. MPT assumes that rational investors should prefer the portfolio with the lowest standard deviation and the solution with the tightest range of variance versus the one with the widest swings in performance. Here is where it gets a bit tricky. MPT also assumes that investors have quadratic utility which means that they have an equal preference for the upside range of the standard deviation as they do to the downside range of the standard deviation. Equal preference for negative returns and positive returns is not rational. Investors will tell you that they have a much greater preference for the upside range then they do for the downside range. I will discuss this bi-linear utility in future WealthThoughts.
In spite of this limitation, MPT remains the core framework for portfolio design in the modern era. We will continue to study how mathematicians improve the application of this time tested theory.
Tuesday, June 7, 2011
WealthThought1
Don't get thrown off course
Markets fluctuate and so do your emotions, especially when market action favors the downside. The recent market weakness has caused some investors to get a bit nervous. We are barraged with market debate on a daily basis. The long term biased view is at times directly counter to the shorter or trading biased view. To make matters worse, unemployment is still high and recent data indicates that more people are taking loans from their 401k plans. So how does the news of the day affect your portfolio? Portfolios are designed with the long term objective in mind. Asset allocation models are constructed based on many years of historical data. Market weakness can be a great time to rebalance your portfolio and add to the exposure that is necessary to maintain your appropriate asset allocation. If your destination is far beyond the horizon, don’t let the obstacles that are close at hand throw you off course.
Markets fluctuate and so do your emotions, especially when market action favors the downside. The recent market weakness has caused some investors to get a bit nervous. We are barraged with market debate on a daily basis. The long term biased view is at times directly counter to the shorter or trading biased view. To make matters worse, unemployment is still high and recent data indicates that more people are taking loans from their 401k plans. So how does the news of the day affect your portfolio? Portfolios are designed with the long term objective in mind. Asset allocation models are constructed based on many years of historical data. Market weakness can be a great time to rebalance your portfolio and add to the exposure that is necessary to maintain your appropriate asset allocation. If your destination is far beyond the horizon, don’t let the obstacles that are close at hand throw you off course.
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