I DON’T HAVE MANY regrets in life. But there is one conversation with my mother that I wish I had never had. It was about moving her into an assisted living facility. She was in her 90s, and I thought it would be best for both of us. My mother would receive better care, and I could take much-needed breaks. She could even keep her house and spend time there when I was with her. It seemed like a middle-of-the-road approach to providing care. I thought it was a win-win situation for both of us. But I couldn't convince my mother to leave the home she had lived in for 42 years. She would ask me questions like, “How far my bed would be from the front door?” I was beginning to understand that she was afraid of moving to an unfamiliar place. It was simply too much to ask of her.  About six weeks later, my mother had a heart attack. She passed away a week afterward in a rehabilitation facility after being discharged from the hospital. Looking back, I sometimes wonder if our discussions about assisted living were harder on her than I realized. It's something I've thought about many times since. After reaching age 75 and coming closer to the possibility of needing more care myself, I now have a better understanding of why my mother wanted to age in place. She valued the familiarity and emotional comfort of her home. She knew exactly how far her bed was from the front door. She maintained relationships with neighbors who would stop by to chat and share a glass of wine. She also knew the people at the stores and restaurants she visited regularly. A few of them even attended her funeral. All of her doctors were nearby. She would often say, "I'm close to everything I need." Recently, when I was experiencing problems with my eyesight, I've felt more vulnerable. One day, while having lunch with my wife, I brought up the topic of how we might receive care in our later years. As soon as I mentioned assisted living, Rachel grew quiet and a sad look came over her face. I've seen that look before. At that moment, I realized I was hearing the same concern I had heard from my mother years earlier. They were thinking about leaving behind a familiar life and moving to a place where everything would be different. My wife and my mother are not alone. About three-quarters of Americans over age 50 say they want to remain in their current homes as they age. I count myself among them. Part of our long-term care planning is an effort to preserve the life we've built here for as long as possible. It's not an easy decision because none of us knows what our future health will look like. Aging in place offers advantages, but it also involves risks. If we need only limited assistance, staying in our home could be significantly less expensive than moving to a senior living community, especially since our mortgage is paid off. We can purchase only the services we need—housekeeping, meal delivery, transportation, or occasional home health care—and adjust that support as circumstances change. At the same time, we retain ownership of our home and any future appreciation in its value. That equity remains available if we eventually need more extensive care. Of course, there is no guarantee that our health will cooperate. Serious illnesses or cognitive decline could create care needs that are difficult or expensive to manage at home. That's one reason some people choose a continuing care retirement community (CCRC), which offers a continuum of care and contracts that can provide insurance-like protection against future long-term care costs. For us, the decision comes down to a tradeoff: Do we value maximum independence and flexibility today, or do we value having a built-in care system already in place for the future? For now, we're taking a hybrid approach. We plan to remain in our home through our 70s and early 80s. We're in reasonably good health, and my eyesight is no longer a major issue. We are planning to invest in accessibility improvements, including a stair lift to our upstairs master bedroom, grab bars in the bathrooms, and brighter lighting. Our house already has a walk-in shower, doorways and hallways wide enough for a walker, and space for a caregiver if one is ever needed. In addition, we’re setting aside a dedicated reserve of 20% of our investment portfolio to help cover future care needs. Most people do not spend years in a nursing home. As a result, we're not trying to fund the most expensive long-term-care scenario imaginable. Instead, we're setting aside enough money to cover the most likely care needs without significantly affecting our lifestyle. If we encounter a more extreme situation, we still have the remainder of our portfolio and the equity in our home available. That’s just basic financial planning: managing risk to a comfortable level instead of spending a fortune to eliminate it completely. We'll reevaluate our situation every few years and remain open to moving to a CCRC or assisted living community if health, mobility, or caregiving needs increase significantly. There may come a day when Rachel and I decide that a CCRC or assisted living community is the right choice. None of us can predict the future, and flexibility has value. But I now understand something I didn't fully appreciate when my mother was alive. A home is more than a place to live. It is a collection of routines, relationships, memories, and comforts that become increasingly important as we grow older. My mother knew that instinctively. She wasn't being stubborn. She was protecting a life she loved and a sense of independence that mattered deeply to her. When she told me she was close to everything she needed, she wasn't talking about stores, restaurants, or doctors. She was talking about belonging. It took me years to understand what she meant. If I had understood it sooner, our conversations about assisted living might have been very different.   Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. Follow Dennis on X @DMFrie and check out his earlier articles

SOCIALISM. IT'S A WORD that can make people on the far left swoon, as they imagine an egalitarian utopia, even while inciting those on the far right to mumble protective oaths like a medieval citizen seeing a sign of the devil. It’s also a word that Google Trends reports has had a surge in search-related interest since last December. As competing visions of how to protect and enhance the American economic system vie for political popularity, the word is used to both support and condemn proposals. Problem is, it’s been stretched, pulled, interpreted and manhandled so much that two people debating the merits of socialism may not even be discussing the same thing. That’s not good if our goal is calm, cool deliberation, rather than emotional, knee-jerk confrontation. Let’s take a step back and revisit some basic economic concepts. Economics is the study of how we make choices. Economic systems are defined by who gets to make those choices. In their purest form, there are three such systems: Free market economy. Individuals, most notably buyers and sellers, make the decisions. They negotiate price and quality. Life is improved, famously, by the “invisible hand” of the competitive market. Its advantage is that it allows maximum freedom, sets an immediate, rational value to things, and inspires capital investment and innovation. The downside is that it’s predicated on a delicate balance of power between buyers and sellers, which—if thrown off—can subvert the system, as happens when someone has a monopoly. In addition, the system is prone to making more short-term, individual-benefitting decisions, rather than long-term choices that might help us collectively, such as reducing pollution or improving mass transportation. Command economy. In this model, decisions are made by those with political power. This is the category into which socialism falls. But the category also includes regulation by republican forms of government, monarchies and dictatorships. Big picture decisions can be made that have long-term advantages, such as constructing public schools to educate future citizens. If done well, it’s also possible to achieve economies of scale—as happens with public utilities. The downside: Governments are notorious for not doing things well, quickly or without waste. Traditional economy. This is the sleeper one—but, ironically, it has the most decision-makers, because the group consists of all our ancestors and their continuing influence. Why is beef off the menu for one religion and pork off the menu for others? Why are many stores closed on Sunday, or clam chowder red in some parts of the country and white in others, or some clothes just for one gender? These are the cumulative effects of cultural decision-making over time, and we often roll with them. The advantage of this system is that it gives people a framework to work within. It offers the comfort and identity that comes with being part of a group. The downside: Traditional decisions can be the hardest to change, even when they have become antiquated and counterproductive. Which system do we have? What’s the best system? The first question is simple to answer, because it is true for every system ever used: We are a mixed system, predominantly free market, but with elements of the others. Go to a grocery store. The owner decides what to sell and what price he wants to charge, though—aware of the importance of culture—he’ll take into account local area favorites. As customers, our choice is limited by the grocery store’s selection—but we always have the choice to go to another grocery store. We can be fairly confident the food sold is of a minimum health standard set by the government, and we may pay for our purchase with government assistance, because we are elderly, a veteran or poor. In other words, it’s mostly free market, but with aspects of both a command and traditional economy. We can debate what the best balance is between the three. But it’s counterproductive to engage in demonizing and name-calling, and we shouldn’t irrationally condemn any of the historic and vital aspects of what’s become the world’s greatest economy. People on the left have no doubt benefited from wealth earned by entrepreneurs. People on the right have had their lives enhanced, and possibly saved, by government safety standards. And we all love national holidays. Jim Wasserman is a former business litigation attorney who taught economics and humanities for 20 years. His previous articles were Applying Pressure, Five Mistakes, Spoonful of Advice and Under the Influence. Jim’s book series on teaching behavioral economics and media literacy,  Media, Marketing, and Me, is being published in 2019. Jim lives in Granada, Spain, with his wife and fellow HumbleDollar contributor, Jiab. Together, they write a blog on retirement, finance and living abroad at YourThirdLife.com. [xyz-ihs snippet="Donate"]

THE WAY INVESTORS think about the stock market may be entirely wrong. Intuition tells us, and academic research confirms, that a company’s stock price should respond to important news and information. When a company announces a new product, for example, its stock should go up. And when results fall short of expectations, it should decline.  But a new paper titled “The Inefficient Pricing of News” calls this idea into question. The authors found that investors respond much more slowly and inconsistently to market news than previously thought. In some cases, it took a year or more for a stock price to respond.  Why would that be the case? Tony Fadell is often referred to as “the father of the iPod.” For years, he worked side-by-side with Steve Jobs, first developing the iPod, then the iPhone. In a recent interview, Fadell shared details of what the product development process looked like inside Apple, and how the reality on the inside often differed from the way it appeared on the outside. Fadell’s comments can help us understand why stock prices often miss the mark. The nature of competition. Investors, Fadell argued, often have a one-dimensional understanding of companies. As an example, he told the story of the development of the iPhone. When it was first released, many observers dismissed it as an overpriced toy. Unlike the BlackBerry, the dominant mobile device for corporate users at the time, the first iPhone lacked key security features and didn’t have a physical keyboard. As a result, it was perceived as a niche product with narrow appeal. Fadell explained, though, that Apple looked at the market differently. Yes, BlackBerry had a very high market share among business users, but it had only a small share of the overall mobile phone market—just 1% or 2%. Apple was interested in the rest of the market: “What about the other 98% of the people? What would they want?” That was the question Apple was asking internally. Observers on the outside, though, underestimated the iPhone’s potential because they assumed they understood Apple’s competitive objectives. The definition of success. Investors often make another mistake, Fadell said. They use the wrong yardstick in measuring successes and failures. He notes that early versions of both the iPod and the iPhone had significant shortcomings. The first iPod worked only with Apple computers. The first iPhone was underpowered and wasn’t open to outside app developers. The App Store didn’t debut until a year after the iPhone’s release. For all these reasons, early critics continued to underestimate the iPhone’s potential even as it gained market share. But inside Apple, the potential was clear. They knew that all of the core components would get better each year and that cell phone networks would get faster. Fadell, who also invented the Nest thermostat, made this observation: “Everything needs three generations. I’ve never seen anyone get it right the first time.” Wall Street, however, tends to not be that patient, and that can lead to a disconnect between perception and reality in stock prices. Fadell notes that even when a product fails, it can be valuable. Apple learned a lot from the Newton, its first attempt at a mobile device. Similarly, Amazon had a short-lived mobile phone called the Fire. From the outside it was deemed a costly mistake, but Jeff Bezos saw it differently. “You can’t, for one minute, feel bad,” he said. The voice recognition technology Amazon developed for the Fire ultimately turned into Alexa. The bottom line: Wall Street’s obsession with quarterly results can cause investors to use the wrong scorecard, and that’s another reason stock prices can move in the wrong direction. The timeline to profits. Fadell noted that the first iPhone was unprofitable but that this wasn’t a concern. Because sales were increasing, Apple would be able to lower production costs. Together with technology advances, management knew that the product would eventually yield profit. “You make the product, you fix the product, then you fix the business,” Fadell explained. Companies pursuing a new idea are often underestimated because they’re judged prematurely. Consider Amazon. It was unprofitable for almost 10 years after its founding. Why? During that decade, the company was growing quickly, but it reinvested as much as it could into warehouses. The result is that it can now deliver packages to many customers the same day. That may have been Jeff Bezos’s vision from early on, but outside observers couldn’t see the roadmap he had in his desk drawer, and for that reason, Amazon was regularly criticized for its lack of profits. The most notable misjudgment: In 1999, Barron’s magazine ran a cover story with the headline “Amazon.bomb.” How did Barron’s editors get it wrong? They had no idea where the company was headed, and for competitive reasons, Bezos certainly wasn’t going to tip his hand. This pattern repeats frequently, and it’s a key reason why stock prices often end up out of line with a company’s true long-term value. "All overnight success takes about 10 years,” Bezos later commented. Timeline to bankruptcy. Sometimes, Wall Street makes the opposite mistake, failing to see when a company is headed into decline. The most famous example in this category may be Kodak, which was the dominant maker of film for traditional cameras. Remarkably, it was a Kodak engineer who invented the first digital camera all the way back in the 1970s. But recognizing the threat it represented, the company shelved the project. Over the course of the 1980s and 1990s, other companies introduced digital cameras, with the result that, between 1990 and 1997, Kodak’s revenue dropped almost 25%. And yet, throughout that period, its stock kept rising, hitting an all-time high in 1997. Investors just couldn’t appreciate the reality of what was happening. But then, just five years later, Kodak filed for bankruptcy. In general, and on average, stock prices do reflect the value of public companies. But for all the reasons Fadell cites, that relationship is often imperfect. This is a fundamental reason why, in my view, investors are best served by choosing diversified index funds rather than trying to pick individual stocks.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.