Wed03042015

News

Council considers freezing First St. development

Council considers freezing First St. development


Megan V. Winslow/Town Crier
A pedestrian walks along First Street in downtown Los Altos last week. Future construction on the street could soon be barred by an emergency moratorium on development.

Further construction along First Street could...

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Schools

Santa Rita students put on Kranky Kids Radio Show

Santa Rita students put on Kranky Kids Radio Show


Traci Newell/ Town Crier
Neighborhood volunteer Lishka DeVoss, center, introduces members of Santa Rita School’s Kranky Kids Radio Club to their interviewee last week. The students star in the Kranky Kids Radio Show, which airs Fridays on KZSU.
...

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Community

Music for Minors partners with Harvard to expand efforts

Music for Minors partners with Harvard to expand efforts


Palmer

When the thriving Music for Minors began to outgrow its capacity, the local nonprofit organization made new friends.

Beginning in late February, Music for Minors – a Town Crier Holiday Fund recipient – partnered with Harvard Business Sch...

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Sports

Eagles make school history

Eagles make school history

Ellie Van Houtte/Town Crier
The Los Altos High School Eagles defeated Santa Clara High School Tuesday to advance to the Central Coast Section basketball finals Saturday.

The Eagles are headed where no Los Altos High boys basketball team has gone...

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Comment

Dangerous streets: A Piece of My Mind

I’m driving along El Monte Avenue between Foothill Expressway and Springer Road at approximately 6 p.m. on a midwinter evening. In keeping with the “village feeling” of our town, there are no sidewalks and no streetlights.

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Special Sections

Lions, lambs and Cab Franc for March

Lions, lambs and Cab Franc for March


Christine Moore/Special to the Town Crier
Oven fries, a slice of feta cheese and the bite of harissa mayonnaise make for a late-winter, early-spring dinner perfectly paired with Cabernet Franc.

I can’t help but wonder whether March will come in ...

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Business

Los Altos scientist named Inventor of the Year

Los Altos scientist named Inventor of the Year

Alicia Castro/Town Crier
Robert Showen, above, the Silicon Valley Intellectual Property Lawyers Association’s Inventor of the Year, began researching his ShotSpotter technology in his Los Altos home. Sensors are placed around a city, below, and fou...

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Books

French novel

French novel "Hunting and Gathering" offers character-driven suspense


Anna Gavalda is a well-known author in her native France, where she has published six books, most of which have met with considerable praise and commercial success. Her fourth novel, “Hunting and Gathering” (Riverhead Books, 2007), is filled ...

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People

JACK JOSEPH CRANE

JACK JOSEPH CRANE

Long time Los Altos resident, Jack Joseph Crane, loving husband and devoted father of two children, passed away peacefully at the Terraces in Los Altos, Saturday, February 21, 2015. He was 95 years of age. Jack was born on June 22, 1919. He is prec...

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Travel

Seoul of the city: Korean capital offers mix of old and new

Seoul of the city: Korean capital offers mix of old and new


Ramya Krishna/Special to the Town Crier
Seoul’s Cheonggyecheon public recreation space, above, features an elevated pedestrian bridge.

Seoul, South Korea, is a study in contrasts. Having grown quickly, the city is a mix of old and new.

Using...

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Stepping Out

TheatreWorks jumps into ‘Lake’

TheatreWorks jumps into ‘Lake’


Kevin Berne/Special to the Town Crier
Jason Bowen, from left, Adam Poss and Nilanjana Bose star in “The Lake Effect,” opening this weekend at the Lucie Stern Theatre in Palo Alto and running through March 29.

The TheatreWorks production ...

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Spiritual Life

Is your thought life sabotaging your spiritual journey?

My computer started having problems – there seemed to be some sort of malware running in the background. At first it was just annoying, then it began to slow down my computer, interfering with its basic operations. What is it doing? Why can...

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Magazine

Local events serve up family fun

Local events serve up family fun


Courtesy of Peninsula Youth Theatre
Peninsula Youth Theatre’s production of “Pecos Bill: A Tall Tale” is slated to open March 20 in Mountain View.

For families seeking a break from the daily routine, events abound this month and next in Los Alto...

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Discovering your risk tolerance

If you have an investment account at a brokerage firm, chances are you’ve encountered a risk tolerance questionnaire.

Such a document purports to determine how comfortable you are with investment risk. Questions range from the simple, “Are you investing primarily for income or for growth?” to the sublime, “If you are offered $100 or the chance to win either $0 or $300, which would you choose?” The firms use the questionnaires to help salespeople sell you suitable investments, but they also serve as protection should the firm be audited by its regulator.

The problem? These questionnaires pretty much tell us nothing about your true risk tolerance.

Daniel Kahneman and Amos Tversky were among the pioneers of what is currently called “behavioral finance,” which attempts to understand the psychology behind the behavior of investors and ultimately how it affects the capital markets. One of their most fundamental findings – for which Kahneman won the Nobel Prize in Economics in 2002 – was that people’s attitudes toward risks concerning gains might be quite different from their attitudes toward risks concerning losses.

For example, in answer to the gambling question above, risk-averse people will typically choose the $100. However, when confronted with the inverse choice of losing $100 or the chance to lose $0 or $300, the same people will commonly select the risky option ($0 or -$300).

The prevailing economic environment also often influences this asymmetrical attitude toward risk. In early 2009, one of my clients had become so risk-averse that she was ready to sell all her investments. Of course I spent time with her explaining the value of sticking to her financial plan and investment strategy. By 2010 – after her portfolio had rebounded not only from market action but from some tactical allocations to a couple of highly undervalued asset classes – she had become so risk-indifferent as to ask what could be done to get her portfolio to outperform that of her neighbor.

Balancing risk tolerance

In practice, I’ve found that risk tolerance should really be considered in two contexts: (1) your need for risk, and (2) your ability to stomach risk.

The first has to do with your financial plan and how much you need to grow your savings in order to have enough money to support everything you want to do for the rest of your life. The higher the needed growth, the greater the risk you will need to take with your investments (and consequently the greater the potential of having to give up some of your goals).

The second involves your emotional ability to deal with losses. If you are fortunate, the two are aligned – that is, your financial situation is such that you don’t need to take on any more risk with your investments than you can handle should markets drop. Your financial life can become stressful, however, when the two are out of sync. There are many people, for example, who keep all their savings in bank CDs. Clearly they are risk-averse in the emotional sense. But they may be taking on too much risk of achieving their future goals given the potential ravages inflation can impose on a long retirement-lifetime portfolio.

In the end, I’m convinced that a financial plan will help you not only balance the two risk tolerance components, but also act as an emotional anchor when times get tough (like in 2008).

Knowing that you have a plan and maintaining the discipline to follow it can help you avoid making the kinds of risky, dysfunctional investment decisions that we as human beings are all too prone to do.

Artie Green, a Los Altos resident, is a Certified Financial Planner and principal at Cognizant Wealth Advisors. For more information, call 209-4062 or email This email address is being protected from spambots. You need JavaScript enabled to view it. .

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