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From the Editor

The first article in this issue raises a very interesting question given the intense level of
discussion on the future of Social Security. Steven P. Fraser, William W. Jennings, and
David R. King in their article entitled, “Strategic Asset Allocation for Individual Investors:
The Impact of the Present Value of Social Security Benefits” argue that Social Security
benefits should be included in portfolio asset mix decisions. They start out by asking three
questions:

1. “Should investors consider Social Security when making asset mix decisions?”
2. “How should an investor determine the value of Social Security benefits?”
3. “How does proper valuation of Social Security affect the asset mix of a financial

portfolio?”

Their analysis indicates that when social security wealth is included, there is an incentive for
more stocks in the asset mix.

Gregory A. Kuhlemeyer evaluates a recent product that the insurance industry has
developed in his article entitled, “The Equity Index Annuity: An Examination of Perfor-
mance and Regulatory Concerns.” He raises issues about the performance of this type of
annuity, its appropriateness for different investors, and the lack of regulation by the SEC.

Is there a differences in black versus white households financial asset portfolio holdings?
If so, should financial planners structure their product offerings differently? These two
questions form the basis of an article by D. Anthony Plath and Thomas H. Stevenson entitled,
“Financial Services and the African-American Market: What Every Financial Planner Should
Know.” Their analysis looks at the statistically significant differences by race and argues that
planners need to recognize the difference in risk preferences when making recommendations.

Ralph R. Trecartin Jr. tests the book-to-market ratio in his article entitled, “The Reliability
of the Book-To-Market Ratio as a Risk Proxy.” He finds that the ratio is a better predictor
of return than cash flow, size, and sales growth. However, it is not reliable for periods of time
that are less than 10 years and it is not a reliable proxy for risk.

The last two articles provide two very different views of finance theory, based on
reviewing literature from other fields. In an article entitled, “On Time: Contributions from
the Social Sciences,” author Barbara S. Poole examines the anthropology and psychology

Financial Services Review 9 (2000) v–vi

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literature on time. She discusses time in terms of culture, pace, environmental factors, and
temporal orientation. An earlier version of this paper received the 2000 AFS paper award
made by the American Association of Individual Investors.

The last paper by Douglas E. Allen and Elton G. McGoun is called, “Hedonic Invest-
ment.” They argue that investing and consuming may be more similar than traditional theory
would suggest when examined from a psychological or sociological prospective. They draw
on marketing literature for their theoretical discussion and use a literary analysis of “The
Motley Fool Investment Guide” to illustrate the concepts. Both the Poole and Allen and
McGoun papers will hopefully provide the basis for further thought on alternative views of
finance.

vi From the Editor / Financial Services Review 9 (2000) v–vi