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October 1, 2014 / 7 Tishri, 5775
At a Glance

Posts Tagged ‘research’

Are Your Investment Decisions Rational?

Friday, September 28th, 2012

As a financial planner, I often ask new clients why a particular investment is included in their portfolio. One answer that I find somewhat worrying is: “I don’t really know how to explain it, but I just had a gut feeling that this stock was going to be a winner!”

Often the stock in question is anything but a winner, but that isn’t the point. If you were to fit a new kitchen, would you simply walk into a builder’s showroom and say that you wanted the kitchen cabinets that are in the storefront window because you had a “gut feeling” about them as soon as you saw them, or would you first visit several showrooms, research the types of materials used and other factors that are important to your decision? Of course you wouldn’t order home renovations based on gut feelings, because thousands of dollars are at stake, as well as the fact that you will have to live with the results of your decision for a very long time.  Just like investing.

Yet very often, investors base their financial decisions on irrational reasoning.

The way that emotions affect investing has become a science and much research is conducted into various phenomena such as loss aversion, mental accounting, and herding. Emotions influence investors’ decisions in many more ways than you would expect. Sometimes fear drives an investor to sell a stock because a sudden dip in the market makes him afraid he’ll lose everything. And, at the other end of the spectrum, is the person who did well with a certain small investment, and figures that because he did well once, he’s bound to do even better if he does it again. He continues to invest in something that might not be appropriate at increased levels, just because he wants to duplicate his previous “win.”

On my radio show, Goldstein on Gelt, I interviewed several researchers who study behavioral investing, including Professor Terrance Odean of Berkeley University, Nobel Prize Winner Professor Daniel Kahneman, and best-selling author Professor Dan Ariely (click on their names to watch videos of these interviews). Watch the videos and let me know if the research on behavioral finance jives with your investment decisions.

$1 Million Israeli BRAIN Prize To Be Awarded in 2013

Monday, September 24th, 2012

A $1 million dollar prize has been announced which will go to the individual or team with the highest potential for helping people around the world by the non-profit organization Israel Brain Technologies.

The Breakthrough Research and Innovation in Neurotechnology (BRAIN) prize will be awarded by a panel of international leaders in neuroscience, technology, and business.

Israeli President Shimon Peres, whose love of brain research led to the founding of IBT, lauded the potential for make inroads against debilitating brain diseases, both in terms of the benefit to mankind and the possibility of economic profit.

The first BRAIN Prize will be awarded at IBT’s Global Brain Technology Conference in 2013.

Leap In Number of Tel Aviv Bicyclers

Monday, September 24th, 2012

More residents of Tel Aviv are taking to the streets to enjoy the fresh air and health benefits associated with bicycling than ever before.  Since 2010, 54% more residents use their bikes to get to work and school  – an estimated 18,000 people, compared to 12,000 just two years ago, according to a survey conducted for the Tel Aviv municipality economic and social research center.

The number of Tel Aviv residents using public transportation has also risen by almost 4 percent.  The use of private cars also dropped by 5 percent, yet is still the most popular method of transportation in the city.

The Tel Ofan bicycle rental project of Tel Aviv – through which travelers can rent bicycles for short intervals to travel between numerous rental stations throughout the city, will be adding an additional 21 spots in the near future.  Approximately 20,000 Tel Aviv residents subscribe to the service.

How to Avoid Being the Next Ponzi Scheme Victim

Tuesday, September 11th, 2012

One of the main headlines in world financial news this August has been the fate of ZeekRewards.com, an online company that offered investors the chance to get rich quick. Interestingly enough, I heard about ZeekRewards before this company hit the headlines, when one of its salespeople contacted me and asked me to represent them. The very pushy salesman nagged me to set up a meeting, but the more he pushed me, the more uneasy I felt. So I decided to follow my mother’s adage of, “If it sounds too good to be true, it probably is,” and I didn’t meet him.

Reading the headlines, I’m very relieved with my decision. ZeekRewards offered promises of returns such as 1.5% of the investment at the end of each day and shares of 50% of the daily profits. Wouldn’t everyone want that kind of deal? However, this August, the Securities and Exchange Commission (SEC) filed an emergency action in a North Carolina federal court because this investment project was yet another Ponzi scheme.

The owners of ZeekRewards must have realized that many of these potential investors were going to ask questions. So, in a bid to protect themselves they added a clause for new users stating that they were not purchasing stock or any kind of “investment or equity,” and they even labeled the whole thing as an “e-commerce subscription.” The SEC saw through their ruse and said that this was not the case and in fact the company was offering its subscribers false securities. However, the average investor did not have the knowledge to understand what they were getting into, and the abovementioned clause probably sounded fair enough.

As people kept subscribing and playing the company’s game, investing and reinvesting, the company’s cash outflows began to exceed its total revenue, leading to a collapse and many unhappy subscribers who were left with nothing.

This time, there are more than 1 million victims of the scheme, making this the largest such bankruptcy case, with around $600 million at stake.

Interestingly, many observant Jews, both in Israel and America, have fallen prey to this scheme. It’s not the first time that Jews have been hit hard by Ponzi schemes (think Madoff).

This raises the question of why Ponzi schemes such as ZeekRewards are tempting to the religious Jewish community. One possible answer is that many religious Jews have large families and in this economic climate finances may be tight. Offer a person who is trying to find legitimate ways to support his family a way to make some extra money, and it’s tempting to find out more.

Sadly, as stated above, ZeekRewards is not a one-off story. Apart from desperation to make more money, another possible reason people fall for these schemes is that the scammers may have gotten smarter.

However, there are three basic measures that you could follow to protect yourself from falling victim in a financial scheme:

1. Remember my mother’s rule: “If it sounds too good to be true, it probably is.” ZeekRewards offered high gains for pressing a few buttons and looking at some ads. This is the first sign of something suspicious. When something sounds too good to be true, ask yourself, “What’s the catch?”

2. Do your research. One potential investor who decided against investing with ZeekRewards said that when he heard about it, he did his homework. He discovered that the company’s securities offerings were not registered with the SEC as required by U.S. federal law. Recognized authorities monitor investments for a reason; their absence speaks volumes.

3. Don’t feel pressured. If the company/salesman/friend keeps nagging you, saying that the investment opportunity will be gone if you don’t “buy now,” it may be wise to let the opportunity pass.

While there are no guarantees in the world of finance, taking these three steps will provide a basic level of protection against becoming a victim of the next Ponzi scheme that rears its ugly head.

If you are interested in hearing more about the biggest investment fraud in history, watch this TV interview that I did on the subject of Bernie Madoff. Although this was four years ago, the points remain the same. If anything, there are more frauds out there and we need to be more careful than ever. So be wary and tread with caution.

The Repercussions Of Divorce

Friday, September 7th, 2012

Dear Dr. Respler:

In your August 24 column, What Can Prevent Marriage, you eloquently discussed how losing a parent at a young age may cause someone to have a hard time getting married. As you made clear this is because of a deep-rooted fear of getting closer to someone and facing the possibility of loss.

Here’s my issue: my parents got divorced when I was young, and I am afraid the same things will happen to me. You see, not only are my parents divorced, two of my siblings – along with an uncle and an aunt – are also divorced. I feel as if divorce runs in my family, and even the married people who I am close with don’t seem to be to happy.

I am writing to you hoping you can address this issue and possibly calm my fears. Dr. Respler, if someone comes from a divorced home and divorce is prevalent in his or her family, does it make the fearful person more afraid of getting married?

I am a young man with many options, but I am afraid of ending up divorced – and miserable. Please help me understand this issue (it would be most appreciated if you would include research to document some of your suggestions).

I want to be able to get married!

Frustrated

Dr. Yael Respler and Dr. Orit Respler-Herman offer the following reply:

Dear Frustrated:

Let me say that we do understand your dilemma. Based on our experience your fear is somewhat valid, as children from a divorced home are more likely to get divorced. That being said, there are many other factors that come into play that can affect a person’s marriage.

There are many individuals who have grown up in a divorced home and have wonderful, happy marriages. There are others, though, who grew up in an intact family but end up get divorced. The manner in which the divorce takes place also plays a role in how the children are reared. For example, if for whatever reason a couple decides to get divorced but ensures that it is amicable to the point that their children are shielded from its details and one (or both) of the parties remarries and is in a healthy and happy marriage, the chances of the children having happy marriages are much greater. The reality is that many children of divorced parents, whether the divorces were amicable or non-amicable, are happily married.

Research shows that growing up as a product of divorced parents significantly increases the likelihood of a child terminating his or her own marriage. Children from divorced homes in America are more likely to get married as teens and marry someone who is also a child of divorced parents. This also increases the likelihood of getting divorced. Research also shows that children from divorced homes are one-third less likely to marry if they are over age 20 when the divorce takes place (Wolfinger, 2005).

More recent research indicates that children from divorced homes have an increased risk of having difficult relationships and marriages (Cui & Fincham, 2010). However, expanded research was conducted to understand why this is so. The two most important factors: conflict managment and commitment to marriage.

One of the main ways children learn about relationships is by watching their parents interact. If children see their parents communicate in a positive fashion, they are more apt to communicate this way with their siblings or peers – as children often copy their parents’ styles of communication. How conflict is handled and how quickly parents become angry seem to have a particularly powerful effect on children’s own skills in dealing with others. Cui and Fincham (see above) found that children raised in households in which their parents do not manage conflict or disagreement well are more likely to have similar difficulties in their own relationships.

Parents also sometimes connect their feelings of commitment to their relationships. Cui and Fincham found that children with divorced parents have less positive attitudes toward marriage and a lower commitment to sustaining romantic attachments. Specifically, when these young people come across difficulties or are somewhat unhappy with the relationship they’re in, they are more likely to end the relationship – as compared to young people whose parents stay married. This finding also extends to marriage, whereby children with divorced parents were less likely to remain in the marriage – as compared to children from intact families.

1500-Year-Old Jewish Town Discovered

Monday, September 3rd, 2012

After more than 100 years of archeological research in Israel, I’m always surprised there’s still so much more to discover.  Sadly, today most such discoveries are driven by construction work.

The Israeli Antiquities Authority announced today that a 6th century Jewish town was discovered north of Beersheba, during work on the southern extension of Route 6.

The archeologists discovered two ritual baths (mikveh) and two large public buildings.  Both buildings had a large platform facing Jerusalem, and archeologists think they served either as synagogues or as a beit midrash, a place for Torah study.

The town was evacuated at the end of the 6th century or the beginning of the 7th century.  A century later a new town was built over the ancient remains.

Iran Doubled Uranium Enrichment Centrifuges

Friday, August 31st, 2012

Iran has doubled its production of uranium enrichment centrifuges at one of its underground facilities.

The expansion, reported by the UN International Atomic Energy Agency, comes amidst mounting pressure from the West and increased talk of a preemptive attack by Israel, which believes Iran has a clandestine nuclear weapons program.

The number of enrichment centrifuges at the Fordow plant, which is located deep inside a mountain, has more than doubled, rising to 2,140 from the 1,064 believed to be there in May, according to Reuters.

The IAEA released the report on Thursday, which included details on Iran’s having demolished of buildings and sterilizing the Parchin military complex, according to Reuters. Such efforts would make it harder for international investigators, if and when they are allowed access, to detect the nature of nuclear research efforts there.

Tehran repeatedly says that its nuclear activity is for a domestic energy creating program and peaceful research.

Talks between IAEA representatives and Iranian delegates resumed last week at the agency’s headquarters in Vienna, Austria.

Printed from: http://www.jewishpress.com/news/breaking-news/iran-doubled-uranium-enrichment-centrifuges/2012/08/31/

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