Sun10192014

News

Campaign finance reports show lots of loans, few outliers

Campaign finance reports show lots of loans, few outliers


Ellie Van Houtte/ Town Crier
Campaign yard signs are just one expenditure for candidates during election season.

Election finance filings are in, and Los Altos appears to be hosting a few financially lopsided races.

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Schools

Three Los Altos schools earn National Blue Ribbon designation

Three Los Altos schools earn National Blue Ribbon designation


Ellie Van Houtte/Town Crier
Bullis Charter School students wear their school spirit clothing to greet their mascot Oct. 3 in celebration of being named a National Blue Ribbon School.

Blach Intermediate, Egan Junior High and Bullis Charter schools ea...

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Community

Sports

Spartans run wild(cat) on Eagles

Spartans run wild(cat) on Eagles


Ellie Van Houtte/Town Crier
Mountain View High running back Austin Johnson goes for a big gain after evading Los Altos High defensive tackle Phil Alameda in Friday’s game. Johnson scored two touchdowns for the Spartans.

After unveiling its wildc...

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Comment

Logan, McClatchie, Peruri for LASD board: Editorial

This is a crucial time for the Los Altos School District. Its leadership faces the challenge of balancing enrollment growth versus maintaining the small, neighborhood schools that make it a very popular district to attend. The district must also adap...

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Special Sections

City's minimum-wage hike earns mixed reviews: Raise to $10.30 an hour meets with approval – and concern

City's minimum-wage hike earns mixed reviews: Raise to $10.30 an hour meets with approval – and concern


Ellie Van Houtte/Town Crier
Tandava Waldon, left, manager of East West Bookstore on Castro Street in Mountain View, works with a customer. Waldon said the recently approved minimum-wage hike will have little impact on his business. “It’s not such a...

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Business

Delay Social Security? An easy way to decide

One of the most heatedly debated questions regarding Social Security is when to start.

You have the option of initiating benefits as early as age 62 or as late as age 70. The longer you wait, the larger the monthly payment you will receive over your...

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Books

Helping kids catch a few Zs: Local dental hygienist pens meditative bedtime book

Helping kids catch a few Zs: Local dental hygienist pens meditative bedtime book


Ellie Van Houtte/Town Crier
Mimi Sommers, who works at a Los Altos dentist’s office, recently wrote a children’s book.

A local dental hygienist recently published a book that aims to ease parents and children during a sometimes anxious e...

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People

SUZANNE MONICA DIMM SPECHT

SUZANNE MONICA DIMM SPECHT

Suzanne Monica Dimm Specht passed Tuesday, Sept. 9th at the age of 84. Sue was born on April 21, 1930 in Portland, Oregon. After graduating from the University of Oregon in with a degree in Music, Sue taught in a little town called Clatskanie, Oreg...

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Travel

Los Altos resident's visit to North Korea proves enlightening

Los Altos resident's visit to North Korea proves enlightening


Courtesy of Sally Brew
North Korea is home to many monuments honoring its “Dear Leaders,” left.

In August, I traveled for 11 days with MIR Corp. to North Korea, a fascinating country that is almost completely cut off from the rest of the world. ...

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Stepping Out

'Trovatore' takes the stage in Palo Alto

'Trovatore' takes the stage in Palo Alto


Courtesy of José Luis Moscovich
West Bay Opera’s production of “Il Trovatore” is slated to open Friday night in Palo Alto and run through Oct. 26.

West Bay Opera’s production of “Il Trovatore” (“The Troubadour”) is scheduled to open this weekend...

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Spiritual Life

Magazine

Local events add color to autumn calendar

Local events add color to autumn calendar


Van Houtte/town crier Visitors make their way through the Children’s Alley.

As Los Altos’ signature Chinese Pistache trees exchange their summer green for vibrant hues of yellow, orange and red in the fall, an abundance of local events also ad...

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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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