Posts tagged ‘CDC’

Sleeping on Expensive Financial Pillows

Everybody loves a good night’s sleep and that requires a comfortable pillow. Unfortunately, many investors are overpaying for their pillows in the form of overpriced, interest-rate sensitive bonds. If you aren’t careful, your retirement dreams could turn into financial nightmares. More specifically, if the composition of your investment portfolio is overly skewed towards bonds, you stand to lose substantial amounts of money if/when interest rates and inflation persistently increase.

In the short-run, pillows manufactured in the form of bonds can feel cozy in a world of low volatility and generationally-low interest rates. However, investors should also ask themselves, how much longer can this unprecedented 40-year bull market in bonds last? Interest rates approached 20% in 1980 and they stand closer to 1% today (1.24% to be more precise). What may now seem like a cozy bond portfolio may eventually lead to unnerving insomnia.

Source: Trading Economics

We already have negative interest rates in numerous countries around the world and inflation (a rise in general price levels) is running hot at about 5% annually. What this means is investing in a 10-Year Treasury Note yielding 1.24% effectively means you are losing almost -4% per year in purchasing power, if inflation remains at 5% (see chart below). There are numerous investing strategies used to fight inflation, but historically stocks’ ability to raise prices through pricing power has been a useful vehicle to fend off the melting of money’s value.

Source: Calafia Beach Pundit

Despite short-term increases in inflation, getting a good night sleep hasn’t been an issue in 2021 as it relates to the stock market. For the month, the S&P 500 stock index was up +2.3% to a new record, and for the year it has surged +17%. The story for the Dow Jones Industrial Average looks similar – for the month rising +1.3% and year-to-date to +14%.

Thankfully, there haven’t been any night terrors yet either in the bond market. Nevertheless, short-term results have been more of a mixed bag. For the month, the iShares Aggregate Bond Market ETF (Exchange Traded Fund – AGG) rose +1.0% and for 2021 slipped -2%.

In spite of stocks being a great place to invest over the last decade or so, solely investing in stocks is not always rainbows and unicorns. The price you pay for longer-term stock outperformance is shorter-term volatility, which can be disruptive to your sleeping patterns. Case in point, the -35% drop in the S&P 500 index at the start of the COVID-19 global pandemic when anxiety and volatility were at extreme levels.
Despite the market continuously hitting new highs, investors are not completely out of the woods yet as spiking Delta variant cases threaten the trajectory of the current economic recovery.

Source: CDC

Although stocks can feel like stiff, uncomfortable pillows in the short-term, in the long-run, historically those stiff, uncomfortable stocks become vastly more comfortable than bonds. Over the last five years, stock prices have dramatically outperformed bonds by +99% (S&P vs. AGG).

Determining your asset allocation is a monumental decision that should be driven by various factors, including risk tolerance, time horizon, income needs, taxes, and other factors such as your personal objectives. Therefore, even if you subscribe to the premise that stocks outperform in the long run, that doesn’t necessarily mean all retirees should load up solely on a diet of stocks.

Retirees who need income or other risk-averse investors generally can’t afford to lose substantial amounts of their net worth, if stocks tank significantly during a recession. Not only could an all-stock portfolio not generate adequate income, an equity-heavy portfolio could also could lead to emotional sales after market declines, thereby locking in permanent losses at low levels. After these potential losses, there may not be enough time for stock losses to be recouped by retirees. If possible, most investors approaching retirement do not want to be forced to work as a greeter at Wal-Mart to compensate for stock losses.

Everybody’s financial situation is different, and everyone has varying risk tolerances and unique needs. As such, working with an independent, experienced, and professional advisor like Sidoxia Capital Management ( can assist you with structuring a proper asset allocation, so your investment pillows can help you achieve a good night sleep.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

This article is an excerpt from a previously released Sidoxia Capital Management complimentary newsletter (August 1, 2021). Subscribe on the right side of the page for the complete text.

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFs), but at the time of publishing had no direct position in any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.

August 2, 2021 at 1:42 pm Leave a comment

The Economics and Consequences of Obesity

‘Tis the season to consume a lot of calories, and my tighter fitting, post turkey-day trousers can attest to that fact. Healthcare reform is front and center in the national debate, as well, and the rising epidemic of obesity should play a significant role in the discussion. Why is this issue so important? According to female financial guru, Suze Orman, we are already spending $57 billion more on obesity than cancer. Obesity-related health care costs totaled about $117 billion in 2000, according to the CDC (Center of Disease Control). One study on obesity estimates the problem will cost the United States $344 billion in health costs by 2018.

Although it may be an uncomfortable issue to talk about, this matter has had a direct personal impact on my family, making the problem all the more tangible to me. Regardless of the function of genetics or what lifestyle choices are made, the negative consequences are indisputable.

Take a look at the table of negative outcomes provided by the CDC:


These consequences obviously take a large toll on the individuals, but they also have a massive impact on our healthcare system. And the CDC has the data to backup the severity of this intensifying problem:

“More than one third of U.S. adults—more than 72 million people—and 16% of U.S. children are obese. Since 1980, obesity rates for adults have doubled and rates for children have tripled. Obesity rates among all groups in society—irrespective of age, sex, race, ethnicity, socioeconomic status, education level, or geographic region—have increased markedly.”


Before solutions can be created, the root problems need to be addressed. One of the factors contributing to increased incidence of obesity is our unhealthy dietary habits (myself included). A chart from the New York Times highlights the economic impact of our food choices has been impacted by inflation trends. Over the last 30 years, unhealthy foods (beer, butter, and soda) have become much cheaper than healthy foods (fresh fruits and vegetables), on a relative basis (see chart below). Making a trip to fast food chains has not only become more convenient, but the practice has also become more affordable.

Source: Bureau of Labor Statistics (NY Times)

With our work lives stretched even further and stress levels rising, the picture below highlights the relationship between obesity (as measured by the Body Mass Index) and minutes spent per day eating. Our unhealthy, indoor, sedentary lifestyles take away from our healthy eating habits as well. The U.S. is the country with the highest percentage of individuals who are obese and the country that spends the third fewest minutes per day eating (eating more fast food). Seems like a fairly tight correlation.

Data Source: OECD (Organization for Economic Cooperation and Development)


Education / Government: Educational support through cooperation with the government is necessary to spread the word regarding the consequences of obesity. Incentives also need to be integrated into our healthcare system so individuals can responsibly attack obesity head-on.

Behavioral Modification: Healthier diet and exercise lifestyles need to be evangelized. Implementation of economic incentives can possibly improve behavior by lowering insurance premiums in exchange for better health compliance. 

Medications: Research needs to continue so innovative medications can help prevent and control obesity. Arena Pharmaceuticals (ARNA), VIVUS (VVUS), and Orexigen Therapeutics (OREX) are  in the late stages in an attempt of getting their obesity drugs approved by the FDA. There is tremendous profit potential if the proper mix of efficacy and safety can be proven, however the detection of side-effects can potentially derail adoption and approval.

Surgery: Advancements have been introduced through medical technologies as well. Allergan’s (AGN) Lap-Band device is an example of an FDA approved device that effectively wraps around the stomach like a rubber-band to control excessive eating urges.

Obviously this is not an easy problem to deal with, as evidenced by the skyrocketing numbers. Many face inherent genetic hurdles in conquering diabetes, while others may have other health issues that contribute to overweight problems.

With the holidays upon us, I still plan on responsibly splurging on occasion, but I’m praying I will have the discipline to mix in some veggies and a run around the block with my eggnog and turkey leg. In the meantime, perhaps I’ll help support the economy by running to the mall and burning some holiday calories by doing some shopping!

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper. 

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients own certain exchange traded funds and AGN, but at time of publishing had no direct positions in ARNA, VVUS, or OREX. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC “Contact” page.

December 1, 2009 at 2:00 am 3 comments

Receive Investing Caffeine blog posts by email.

Join 1,776 other followers

Meet Wade Slome, CFA, CFP®

More on Sidoxia Services


Top Financial Advisor Blogs And Bloggers – Rankings From Nerd’s Eye View |

Wade on Twitter…

Share this blog

Bookmark and Share

Subscribe to Blog RSS

Monthly Archives