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An increasing number of overweight Americans have lost the motivation to diet. enisaksoy/Getty Images hide caption

An increasing number of overweight Americans have lost the motivation to diet.

An increasing number of overweight Americans have lost the motivation to diet, according to a new study published in the Journal of the American Medical Association.

Back in 1990, when researchers asked overweight Americans if they were trying to lose weight, 56 percent said yes.

But this has changed. According to the latest data, just 49 percent say they're trying.

This may not seem like a big decline. But given that about 2 out of every 3 Americans are either overweight or obese, a decline of 7 percent means millions more people may have given up on dieting.

"The trend is particularly evident among black women," says study author Jian Zhang, an epidemiologist at Georgia Southern University though the trend is seen across the population.

So what gives? It seems our perceptions about dieting and our attitudes about overweight people are shifting.

"Women are leading the decline in dieting," the NPD Group told us in 2013, when the group's survey data picked up on this trend.

There seems to be a growing acceptance of bigger body sizes. And women we spoke with helped illuminate this shift.

Plus-size model Ashley Graham walks the runway during the Michael Kors Collection Fall 2017 fashion show last month in New York City. UCLA psychologist Janet Tomiyama says there are signs that the strong anti-fat bias in our culture may be shifting. JP Yim/Getty Images for Michael Kors hide caption

Plus-size model Ashley Graham walks the runway during the Michael Kors Collection Fall 2017 fashion show last month in New York City. UCLA psychologist Janet Tomiyama says there are signs that the strong anti-fat bias in our culture may be shifting.

"My family still loves me and my friends do, too, so it's not like I feel bad about how I look," Cynthia Rodriguez told us.

I met Rodriguez and her family at a food court where they like to go for dinner. Rodriguez told me she weighs more than she should, but she doesn't feel the pressure to diet.

She says she tried dieting in the past, but she didn't lose weight. "It's a negative thing ... like a punishment," Rodriguez says.

These days, Rodriguez says she's trying to exercise more and be healthy, but that doesn't mean she's aiming for skinny. She says not everyone needs to be a size 2.

And her sister Rosa Rodriguez says with more overweight people around, there's a new norm. "Everyone's more comfortable with themselves," Rosa says. "If you feel [good] with the body you have, [whether it's] being size 2, size 10, or size 16, it's just [about] being comfortable."

The authors of the new study point to other reasons overweight people may have given up on trying to lose weight "primary care doctors not discussing weight issues with patients," for instance.

The paper lays out another factor, too: "The longer adults live with obesity, the less they may be willing to attempt weight loss."

"It's a big concern," study author Jian Zhang told us. Obesity increases the risk of a whole range of diseases, and there's a concern that people who are overweight and obese may be ignoring or overlooking the risks.

Not everyone is convinced that the dip in dieting is bad. "There's a possible good news story in this," says Janet Tomiyama, a psychologist at UCLA who studies eating behavior and weight stigma.

"We're not going to shame people into health," Tomiyama says. Crash diets focused on weight loss often fail. But "a lot of research shows that having a healthy body image is what leads to better health outcomes."

She says that the women I met at the mall, including Cynthia Rodriguez, were onto something: focusing on health more broadly instead of just weight.

"Maybe people are taking the focus off the number on the scale, and going more towards focusing on their health," she says, such as sleeping habits and exercise habits and strategies to de-stress.

Tomiyama says there are signs that the strong anti-fat bias in our culture may be shifting.

"There may be a sea change toward pushing back against body shaming and fat shaming," says Tomiyama. And it goes beyond just the shift in perceptions in the U.S.

This month, Vogue magazine put a plus-size model on its cover and the fashion world has begun putting curvier models on the runway. "Even in Paris, a city known for its razor-thin models, signs of hope came via the appearance of Katy Syme and Stella Duval at H&M's vibrant see-now-buy-now show," wrote Janelle Okwodu in a Vogue.com story this week about the fashion world's new focus on inclusivity.

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Is Dieting Passe? Study Finds Fewer Overweight People Try To Lose Weight - NPR

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Trending News: Americans Are Giving Up On Losing Weight (But Eating More Bacon) Long Story Short

A depressing but eye-opening study has found that more and more overweight Americans are not even trying to lose weight, while separate research has warned of the dangers of the typical US diet.

Everyone knows that dieting sucks. None of us would choose to replace burgers with salads, but theres no other option is there?

Well, it would seem that for many Americans there is an alternative to the misery of healthy eating letting yourself go.

The percentage of Americans who are overweight or obese continues to steadily grow and is now at 66%, but possibly more importantly those who are out of shape are becoming less and less likely to try and do anything about it.

Research from Georgia Southern Universitys College of Public Health published in the Journal of the American Medical Associationhas revealed some worrying stats from the Nutrition Examination Survey by the Centers for Disease Control and Prevention.

Between 1988 and 1994, 56% of overweight or obese people reported trying to lose weight in the previous year, but from 2009 to 2014, just 49% tried to shed some pounds.

The effect was most striking in black women, where back in the early 90s around 66% of overweight or obese women had dieted. But the most recent survey found just 55% were now making any effort to diet.

Researchers suggested that Americas "socially acceptable body weight is increasing"or put simply that "fat has become the new normal,"pointing to a recent study which found that people are less likely to consider themselves overweight than ever before even if they are.

Another possibility is that Americans are starting to understand that yo-yo dieting (and also yo-yo exercising) in fact leads to greater damage in the long term, but on the whole it would appear that the overweight US has given up.

The study authors wrote: The longer adults live with obesity, the less they may be willing to attempt weight loss, in particular if they had attempted weight loss multiple times without success.

But in a timely reminder of why giving up isnt a good plan, another paper in the Journal of the American Medical Associationreveals.

that nearly half of U.S. deaths from heart disease, stroke and diabetes can be blamed at least in part on diet.

Of the 700,000 American deaths in 2012 from the three deadly conditions, about 45% were attributed to eating bad foods, such as bacon, hot dogs and red meat.

So it really isnt a smart option to simply do nothing, however tempting it is. And it is really very tempting.

Is there a better way to associate diet with health (rather than vanity) so that people take it more seriously?

Within five years of having lost weight, 95% of dieters will regain all of it and most people will put a little extra weight on in addition.

Originally posted here:
More And More Americans Giving Up On Losing Weight Despite Latest Warnings On Bacon And Soda - AskMen

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When Gabourey Sidibe decides to do something, she really goes for it.

The Empire star elected to have weight-loss surgery last year and has absolutely no regrets about doing it. Sidibe opens up about the big decision in her upcoming memoir, This Is Just My Face: Try Not to Stare, and to People.

"I just didn't want to worry," Sidibe, 33, tells the magazine of her decision to get laproscopic bariatric surgery after she and her older brother Ahmed, 34, were diagnosed with Type 2 diabetes. "I truly didn't want to worry about all the effects that go along with diabetes. I genuinely [would] worry all the time about losing my toes."

Jason LaVeris/FilmMagic, razer Harrison/Getty Images

Sidibe rose to fame after appearing in the hit film Precious. Aware of her size, Sidibe tried to lose weight for 10 years before ultimately pursuing surgery in May 2016. The choice has completely changed the way she treats food. "My surgeon said they'd cut my stomach in half. This would limit my hunger and capacity to eat. My brain chemistry would change and I'd want to eat healthier," she writes in her memoir, which hits shelves in May, per People.

"I'll take it! My lifelong relationship with food had to change."

She also doesn't see her choice as an "easy way out."

"I wasn't cheating by getting it done," she says. "I wouldn't have been able to lose as much as I've lost without it."

Sidibe's relationship with her body and food has been tumultuous ever since she was a little girl. When her parents divorced, Sidibe started to suffer from depression, bulimia and anxiety. But after undergoing therapy, Sidibe learned to love herself.

"It has taken me years to realize that what I was born with is all beautiful," she writes. "I did not get this surgery to be beautiful. I did it so I can walk around comfortably in heels. I want to do a cartwheel. I want not to be in pain every time I walk up a flight of stairs."

Almost a year later, Sidibe continues to lose weight, but she's not willing to say a specific number. "I have a goal right now, and I'm almost there," she says. "And then once I've got it, I'll set another. But my starting weight and my goal weight, they're personal. If too many people are involved, I'll shut down."

That being said, she does not want to lose too much weight. "I admit it, I hope to God I don't get skinny," she writes in This Is Just My Face. "If I could lose enough to just be a little chubby, I'll be over the moon! Will I still be beautiful then? S--t. Probably. My beauty doesn't come from a mirror. It never will."

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Gabourey Sidibe Gets Candid About Her Secret Weight-Loss Surgery: "I Wasn't Cheating" - E! Online

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Get your life in sync and never miss an update with the SMART FIT Mini Health & Fitness Monitor Watch!

This deal is mind-blowing! Originally retailing for $149.95, the watch is currently 81% off at the Radar Shop! Well do the math for you that means its only $27.98!

This watch does it all, except for actually hitting the trail for you. It monitors your activity and sleep, while syncing with your device via Bluetooth to keep you abreast of all incoming text messages and calls. Furthermore, you can track your fitness progress on the SMART FIT app thats made available for free to all users.

Thats not all though! The SMART FIT watch can also be used as a remote with your smartphone camera, set up as an anti-loss alarm (an alarm sounds if youre more than 50 feet away from it), and synced up to your phone post-activity so you can leave your phone at home.It also features an OLED bright display to let you view it in any light and is water resistant due to the IPX6 water-resistant standard.

This is a marvel of a smartwatch at a deal you really cant afford to miss! Get the SMART FIT Mini Health & Fitness Monitor Watch for only $27.98 at the Radar Shop!

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Lose Weight & Read Your Texts On-the-Go with This SMART FIT Watch (81% Off) - Radar Online

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Researchers say it is because people face more temptation to over-indulge when dining out than at home, work, or in their car

FATTIES are less likely to stick to a diet when eating in a restaurant, a study found.

Those on a calorie-restricted diet ate too much six times out of ten.

Getty Images

Researchers say it is because people face more temptation to over-indulge when dining out than at home, work, or in their car.

A group of 150 obese volunteers spent a year reporting what and where they were eating and whether they were tempted to break or broke their eating plan.

Temptations included guzzling sugary drinks or gorging on cake, a large portion of chips, or too much chocolate.

Getty Images

Participants had fewer temptations in their own or someone elses home than in a restaurant but were just as likely to lapse.

The risk of caving in to temptation fell to 40 per cent at work and 30 per cent in a car.

They were also more likely to cheat when surrounded by others who were eating.

Study leader Professor Lora Burke, from the University of Pittsburgh, said: Research into understanding and preventing weight regain is vital for improving the public health.

University of Pittsburgh

Helping an individual anticipate challenges and problem-solve high-risk situations can empower them to stay on track with their weight loss plan.

She said the findings could be used to develop weight-loss programmes, in which people are sent motivational messages when dining out.

The findings were presented at a conference hosted by the American Heart Association.

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Fat people more likely to cheat on calorie-controlled diets when eating out, study reveals - The Sun

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TUESDAY, March 7, 2017 (HealthDay News) -- Sticking to a diet is tough enough, but eating out with friends or family may up the odds of cheating by about 60 percent, a new study suggests.

"When you're in a restaurant, you're probably more vulnerable than you think you are," said study author Lora Burke, a professor of nursing at University of Pittsburgh.

"Whenever you're in a high-risk situation, you could easily eat beyond what you'd planned to," she added.

More than 70 percent of American adults over age 20 are overweight or obese, according to the U.S. Centers for Disease Control and Prevention. And an estimated 45 million Americans diet each year, according to Boston Medical Center's Nutrition and Weight Management Center.

In the study, Burke and her colleagues estimated both the rate of diet temptations and the probability a lapse would follow based on dieters' location -- such as home, a restaurant or workplace -- as well as whether they were alone or with others.

The researchers had 150 adults use a smartphone app to report when they felt temptation, and whether or not they succumbed to that temptation. Ninety percent of the volunteers were women. Eighty percent were white.

The study participants' average body mass index (BMI) was 34, putting them in the obese category. BMI is a rough measure of a person's body fat calculated with weight and height measurements. A BMI of 18.5 to 24.9 is considered normal. From 25 to 29.9 is overweight, and a BMI of 30 or over is considered obese.

As an example, a 5-foot-4 woman weighing about 200 pounds, or a 5-foot-9 man weighing 230, both have a BMI of 34 (the study average), the researchers said.

Diet temptations were defined as eating a food or an amount of food inconsistent with a weight loss plan. Diet temptations occurred most often in a restaurant while eating with others or in sight of others who were eating, the study showed.

Temptations didn't occur as frequently in another person's home as in a restaurant. But there was still nearly a 65 percent likelihood of a diet lapse in someone else's house.

"They're probably paying more attention to the social situation and the conversation and not as much to what they're eating, so they eat more," said Penny Kris-Etherton. She's a registered dietician and professor of nutrition at Penn State University. She wasn't involved in the new research.

"I would never tell anybody not to go out and eat with friends," she added. "That's not the message -- friends are so important. But be mindful of what you're eating."

The odds of a diet lapse were lower in other locations, such as work (about 40 percent) and in a car (about 30 percent). But, the study participants cheated on their diets nearly half the time when alone as well.

Burke and Kris-Etherton both urged people to frame their healthier eating plans as a lifestyle rather than a diet. Changing that mindset, they agreed, can help ease the pressure to perfectly adhere to dietary goals.

"If you know you want to go out on Friday night, have less to eat on Thursday and Saturday," Burke suggested. "Bank your calories. You can take a break. It's about balance."

Mary Williams is a registered dietitian in the department of family and community medicine at Christiana Care Health System in Wilmington, Del. She noted that restaurant dining is more challenging for those aiming to cut calories when they don't arrive with a plan in mind.

"Many times people go into a restaurant and have never looked at the menu, so they don't have a game plan in mind," said Williams, who wasn't part of the new research. "I often tell our clients to review the menu beforehand so they have some idea of what to pick so they're not unduly influenced by everyone [else]."

Kris-Etherton said those trying to lose weight can still enjoy eating out with friends by making a few small tweaks that can save them from consuming too many calories.

"If everyone is ordering alcoholic beverages, don't order a Long Island iced tea, which can have 800 calories," she suggested. "Order a glass of wine or something with far fewer calories."

"Also, you don't need dessert, especially if you have an appetizer," Kris-Etherton added. "If everyone's ordering dessert, maybe split one and take a couple of bites."

The study was to be presented on Tuesday at an American Heart Association meeting in Portland, Ore. Research presented at scientific conferences typically hasn't been published or peer-reviewed, and results are considered preliminary.

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Dining Out Can Doom a Diet - Lincoln Journal Star

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Women's Health

9 Things That Make It Harder To Lose Weight In Your 20s, 30s, And 40s Women's Health We don't have to tell you that trying to lose weight in your twenties is not the same as it is in your forties. But the reason why isn't as simple as a slowing metabolism. "There are so many reasons we gain weight throughout our lives," says Karen ...

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9 Things That Make It Harder To Lose Weight In Your 20s, 30s, And 40s - Women's Health

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JACKSON, MS--(Marketwired - March 09, 2017) - The Egg Diet is gaining steam as a way to lose weight fast. Diets that rely heavily on protein do normally provide weight loss benefits due to the fact that consuming added protein does greatly reduce appetite and assists with portion control since protein helps one to feel full quicker and for a longer period of time. High protein diets also contribute to muscle repair and growth which leads to a higher metabolism and higher fat burning (even at rest). However, with protein as the basis of any diet, individuals must be careful as not to overconsume or neglect nutritional balance. Higher protein can also mean elevated cholesterol and in some cases, it can have damaging effects on the kidneys.

Dr. Nishant Rao of Diet Doc Medical Weight Loss believes that the Egg Diet is simply a ketogenic diet which uses egg protein and egg fat rather than a more diverse set of options. "Diets which focus on any one ingredient exclusively tend to be very short lived with minimal long term compliance," states Dr. Rao. Sustainable weight loss strategies that do not impede on nutrition are always the better way to go for long-term success. Dr. Rao continues, "A more structured approach of calculating required macros for diet goals and an understanding of the varied foods one can use to hit those macros in a healthy fashion is the only way to allow for flexible long term and enjoyable dieting."

Most experts view individualized, nutrient-rich diets as the best way to lose fat or maintain a healthy weight. Diet Doc Medical Weight Loss has a range of dietary options to suit every weight loss need. Whether an individual needs to lose 20 lbs or 100 lbs, Diet Doc's weight loss coaches assess each patient's health profile and creates personalized solutions rather than the one-size-fits-all, fad dieting method. Their nutritionists can provide meal planning, guidance and fat burning medications that will prevent hunger pangs, stabilize mood and increase energy so that losing weight quickly is a breeze.

Patients can get started immediately, with materials shipped directly to their home or office. They can also maintain weight loss in the long-term through weekly consultations, customized diet plans, motivational coaches and a powerful prescription program. With Diet Doc, the doctor is only a short phone call away and a fully dedicated team of qualified professionals is available 6 days per week to answer questions, address concerns and support patients.

Getting started with Diet Doc is very simple and affordable. New patients can easily visit https://www.dietdoc.com to quickly complete a health questionnaire and schedule an immediate, free online consultation.

About the Company:

Diet Doc Weight Loss is the nation's leader in medical, weight loss offering a full line of prescription medication, doctor, nurse and nutritional coaching support. For over a decade, Diet Doc has produced a sophisticated, doctor designed weight loss program that addresses each individual specific health need to promote fast, safe and long term weight loss.

Twitter: https://twitter.com/DietDocMedicalFacebook: https://www.facebook.com/DietDocMedicalWeightLoss/LinkedIn: https://www.LinkedIn.com/company/diet-doc-weight-loss?trk=biz-brand-tree-co-logo

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Dr. Nishant Rao Examines the Weight Loss Merits of the Recent 'Egg Diet' Craze - Marketwired (press release)

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One of the toughest times to manage the urge to snack is late in the evening before bed but long after your dinner has settled.

If youre among those who have heard or been told that eating late at night will destroy any weight loss youre aiming for, somegood news alight late-night snack wont completely derail your dreams.

"What matters most is the amount of calories you eat for the day and how many calories you burned at the end of the day to create a balance or a deficit," said Sylvia Melendez-Klinger, a registered dietician and founder of Hispanic Food Communications. She'a slso a scientific advisory board member to the Grain Foods Foundation.

"For example, if you consume about 2,000 calories per day which is not a lot of food you will need to decrease 500 calories to lose weight safely. So you will need to consume only 1,500 calories or try to burn some of the extra calories with exercise," she told LifeZette.

Related: The Biggest Cause of Our Kids' Weight Gain

Melendez-Klinger recommends keeping any eveningsnacks to between 100 and 200 calories. Portions and serving sizes are more important than deprivation. Also, try to avoid heavily caffeinated beverages and snacks that are high in calories before bedtime.

Some great snacks that might curb your cravings and satisfy the grumbling in your stomach:

1.) Crackers andhummus.Stick to just a couple tablespoons of hummus and you'll be good. The snack is a great source of proteinand fiber.

2.) Acup of yogurt with berries.This great snack is low in calories and high in nutrients. It's always a great option, but watch the sugar in the yogurt.

3.)A glass of milk and a little cookie.You can "never go wrong" here, saidMelendez-Klinger.

4.) Air-popped popcorn.Skip the butter and instead add some parmesan cheese.

5.) Apple with peanut butter.High in fiber and protein, this will leave you feeling satisfied but not overly full and it will get you through the night.

6.) Fruit smoothie.A small glass of plain kefir mixed with fresh or frozen blueberries or strawberries is filling and satisfies a sweet tooth.

7.) Whole grain cereal.Quite afewcereals containa lot of sugar so be careful what you choose here. But whole grain cereals can be rich in fiber and low in calories, making for a great late-night snack.

8.) Applesauce.A cup of this will give you a healthy dose of fiber and promote good digestive health.

You may want to fast, said Melendez-Klinger, if you're experiencing gas, bloating or any intestinal problems or if you need any medical procedures or blood work.

"However, we dont recommend fasting for long periods of time just to try to lose weight rapidly. It can be counterproductive. You are basically dehydrating your body and depriving your body of daily essential nutrients, and you will be devouring anything in front of you by the time you start eating again," she said.

Related: Why Our Kids Crave Connectedness

A few hours of fasting with plenty of water can help you get your digestive system back on track, if needed; but a well-balanced diet with plenty of fiber and water along with exercise can keep your weight under control.

Something else to keep in mind, she added, is that the body needs time to digest the last meal of the day. Its recommended that if you eat a larger meal at night, give yourself at least two to threehours before bedtime. Walking after dinner or doing some other activity will help you digest your food better.

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Yes, You Can Snack at Night and Still Lose Weight - LifeZette

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March 8, 2017

By Jon Grabel

It is important to play games. We view gameplay as imperative for children because it helps with cognitive and physical development. Competitions teach children patience, social skills, negotiation, strategy, confidence and how to win and lose. Games are also important for adults. As we age, these activities help relieve stress, maintain brain function, stimulate creativity and help us feel young and energetic. In addition, games enhance our professional development. For example, the military conducts war games to teach our soldiers the complexity of their craft and prevent catastrophic outcomes. Airlines make a significant investment in flight simulators so the 87,000 flights that cross our skies each day take us safely to our destinations. Lawyers hone their skills in mock trials to better advocate for their clients. Professional athletes go through preseason games so they can deliver more victories to their fans. Throughout our lives and across settings, games benefit us in multiple dimensions.

In this spirit, the $14.5 billion Public Employees Retirement Association of New Mexico (PERA) investment division has an internal investment competition. Each member of the team constructs a hypothetical portfolio based on agreed-upon criteria. The portfolios run throughout the calendar year, with weekly checkpoints. This annual exercise began in January 2015 as a way to facilitate anesprit de corpsand instil incremental investment acumen and discipline. It is a highly productive exercise, as it creates an environment in which all members of the team can challenge one anothers hypotheses. Moreover, this atmosphere facilitates constructive feedback in which people formulate ideas and defend their positions. Improving investment knowledge, skill and discipline across the team benefits PERAs 100,000 members, as we continually strive to improve the processes through which we administer the pension trust fund. As we near the end of this years competition, several themes and behaviours have emerged that are similar to those we see in the institutional investment marketplace. Thus, our friendly simulation has become a microcosm of the asset management space. This virtual reality helps flag behavioural biases across PERAs roster of money managers and allows us to minimise the impact of potential adverse influences.

The rules

Each participant begins the investment period with a fictional $10,000 portfolio. A virtual exchange prices securities and processes trades. Accounts must contain at least three distinct asset categories, hold 10 positions of 5 per cent, have no single holding greater than 20 per cent and have one-third of assets invested internationally. Eligible investments include indices over stocks, bonds, real estate, real assets and commodities. Team members can invest in publicly traded securities and exchange-traded funds (ETFs). Players must choose their own portfolios and cannot adopt actively managed mutual funds. In addition, portfolio rebalancing is required each month. To create a dynamic competition, the portfolios must change by at least 10 per cent as part of this monthly rebalancing exercise. Moreover, the competition does not allow borrowing funds against assets. The group serves as its own watchdog and monitors compliance.

Performance

Observing how fluctuations in the markets affect each players portfolio teaches a great lesson about investing. The year 2016 had a horrific start. The broad MSCI All Country World Index was down more than 10 per cent through the first six weeks of the year. Markets also exhibited dramatic drawdowns across most asset categories in June, with British voters unanticipated decision to leave the European Union. In addition, there was volatility on either side of the US presidential election. Due in part to these and other market gyrations during 2016, the investment challenge highlighted the benefits of broad asset category diversification.

Recalling the guidelines, portfolios could have no position greater than 20 per cent (including cash) and had to maintain diversification across asset categories and geographies. As a result of these guidelines, the virtual portfolios weathered the difficult environment. The philosophy behind the guidelines is consistent with that of the real-world PERA fund. PERA diversifies its investments across asset categories and geographies. The fund does not try to time markets; asset category diversification provides risk mitigation across cycles.

The rebalancing the game requires is another critical element to success in uncertain markets. It is the process of realigning the weightings of a portfolio of assets. This involves periodically buying or selling assets in a portfolio to maintain a desired asset allocation and risk tolerance. Specifically, an investor would sell above-weight investment strategies in order to buy those that are below the target amount. This is another key investment tenet of the PERA fund. As the virtual portfolios generated gains following market downturns, so too does the PERA fund benefit from rebalancing over the course of a full cycle.

Investment operations emerged as another key element in the competition. For example, the virtual exchange we used to manage our friendly competition failed to account for stock splits. It also did not properly return cash for an ETF that was delisted. These operational flaws affected the reported values of several portfolios in the simulation. As our team is quick to note, investment operations should be front and centre. It is nave to refer to these important functions as back-office; they are critical to the proper function of a complex institutional investment program. Good investment performance is dependent upon the right operational infrastructure.

Observations and lessons

Many patterns emerged from the 2016 investment competition. These items stimulated much debate among the group. Here are some of the issues we discussed, our observations on them, and lessons they taught us.

Active v passive strategies

Observation: The principal difference in the portfolio models employed by the group was the use of active versus passive investment strategies. Active strategies try to beat a market benchmark through skilful security selection. Passive or indexed strategies embrace a benchmark predicated upon the belief that markets are efficient over time, especially when adjusted for risk and fees. Many people invested in a collection of passive indices. Others created concentrated portfolios of individual securities. The latter group embraced volatility and the former shied from it. There were nuances across implementations. Some of the participants were active within their asset category specialty and passive across other strategies. Others took the opposite approach and embraced risk in the areas outside their subject matter expertise.

Lesson:We believe asset allocation is the principal driver of the variance in performance for diversified portfolios. While picking an individual security may be more exciting, it is not the winning solution over an extended period for a public pension plan. Absent proprietary research, broad exposure to multiple asset categories is a better long-term investment approach for an institution such as PERA. Our mandate is to distribute benefit payments today and into the future. Accordingly, spreading capital across various asset category indices or betas provides better downside protection. The decision to invest in an index versus picking individual securities provides valuable insight into the actual marketplace. For efficient asset categories, such as large-capitalisation US public equities, active managers have trouble beating the comparable passive strategy. Moreover, those managers who beat the index in a given period often trail it in subsequent ones. Yet, active managers have an allure that is akin to a good story. From a marketing perspective, these story-based strategies attract much attention because they are fun and appeal to the adventurer in all of us. We all want to win and active strategies give us a chance to beat the odds. At the same time, many of these stories belittle passive strategies as boring and pedestrian. The managers challenge is to rise above the noise by optimising the expected return per measure of expected risk. Adventures are fun, but for the most efficient asset categories over extended periods, indexing may be the optimal strategy.

Crowding

Observation: Another behavioural theme relates to crowding. Each portfolio in the competition is transparent and visible to every participant. Crowding exists when many people invest in similar securities and strategies. With similar trades come like outcomes. Like outcomes yield blurry information and a lack of differentiation. Said differently, there is safety in numbers.

Lesson: As we see with commonplace trades in the money-management space, crowding benefits money managers through consistent peer performance. As a positive, this may allow someone to win by not losing. Alternatively, this is akin to benchmark hugging (when an active manager closely mimics its underlying index) or survival through conformity. One motivation for such risk-averse professional portfolios is asset and fee maximisation. Specifically, managers that move with the herd may have a better survival rate. Clients may not fire them based on undifferentiated peer comparisons.

From the perspective of the PERA portfolio, our most significant form of risk management is diversification. In addition to diversifying our investment strategies, we also employ multiple money managers to avoid organisational risk within a single investment firm. Our money managers peer rankings are not particularly relevant. We do not benefit from overlap or crowding within like mandates. Crowding helps only our money managers. It shifts the focus from what is an optimal investment structure to what is safe in the context of peers and universe rankings. Where we employ active money management, we expect our managers to express an educated point of view and develop the best collection of securities in a category. We encourage our managers to think and execute, as opposed to just surviving against their peers. We want our managers to be hungry and motivated to generate appropriate risk-adjusted returns for PERA. We are vigilant towards this end. We structure tight investment guidelines with each money manager. Investment guidelines are a list of dos and donts for them. We also hold the vast majority of our investment securities at PERAs custody bank. This account structure gives us greater visibility throughout the whole PERA fund and helps us avoid unintentional positional biases such as crowded trades.

Quartile rankings

Observation: In contrast to the crowded portfolios, some within the investment challenge went their own way and tended to perform at either the high or the low end of the spectrum. People in this group changed in the standings throughout the year and readily moved from top 25 per cent to bottom 25 per cent and vice versa. It is noteworthy that some within the go-it-alone cohort tended to reduce risk and join the benchmark huggers after periods of success.

Lesson: Once again, this is a common observation in money management. Managers often gain attention subsequent to a period of outperformance. Asset owners and their advisers flock to investment managers based on historical performance. However, mediocre performance often follows success, as a manager may have incentives to play it safe. We see this in sport when a team with a large lead starts playing less aggressively and taking fewer risks. In investing, like sport, there may be a victory despite a change from successful tactics. Specifically, the money manager may gain additional investors. With additional clients come additional wealth and fame. Losing this source of income would not be a rational action by a money manager. Unfortunately for incremental investors, the desired outcome may be disappointing, as the previous success often yields mean reversion. S&P Global publishes data on this in its persistence scorecard. This report details the lack of consistent placement in the top quartile by money managers. In many cases, the passive strategy produces the most reliable performance.

Distribution

Observation: The dispersion of portfolio returns over the course of the year is somewhat related to the preceding theme, yet this observation is different. Typically, the majority of balances resided in a tight band throughout the year. The median portfolio (the middle one) moved up and down based on overall market conditions and at of the year it generated a positive return. The concentrated nature of the set of portfolios is representative of a distribution curve taught in an introductory statistics class. The shape, however, was not normally distributed. There was a significant difference between the median and the mean (average). In our case, more people performed above the average. The underperformance was greater than the outperformance, indicating the risk-taking incentives for those in the bottom quartile.

Lesson: Our virtual world is instructive as an analogue for the real one. The existence of a distribution curve is also highly relevant for institutional investors. Too many mangers and institutions refer to their portfolios as being in the top quartile. Mathematically, not everyone can even be above the median, let alone in the top quartile. There is excessive marketing accompanying peer standings. Institutional investment mandates are too important to award participation trophies to all managers. Balancing qualitative and quantitative factors in an unemotional manner enables investors to better position a portfolio.

Risk-taking incentives

Observation As illustrated above and much like the ending scene inThelma & Louise, team members with diminishing chances of winning the competition took uncompensated risks as we neared the end of the year. Whether it was panic or a refusal to accept defeat, this group dramatically increased risk. By investing in higher beta strategies such as IPOs, companies in crisis and countries with geopolitical turmoil, these participants hoped for a big pay-off. These last-chance strategies had mixed success, but were arguably rational decisions from the point of view of game theory.

Lesson In a simulation, it is easy to adopt the mantra go big or go home. The PERA investment team realises that we cannot take this type of cavalier approach to managing a portfolio as important as the PERA fund. The lessons from the investment competition are vital to remaining humble, focused and disciplined. As for the takeaway, it is imperative to understand manager or strategy underperformance and evaluate it in the context of a larger portfolio. Underperformance can be a result of an out-of-favour strategy detracting from returns, such as energy in 2015. Alternatively, poor performance can be an indicator of excessive risk within a strategy. Judgement based on experience and collaboration is necessary to recognise that out-of-favour strategies may be attractive in the future. This is the premise behind rebalancing programs that foster a buy-low/sell-high philosophy. In contrast, it is prudent to avoid managers that incur excessive risk, like Thelma and Louise, in trying to elude a bad outcome. Hope is not an investment strategy and may lead to unintended consequences. At PERA, our systems and processes help determine the positive and negative contributors to performance. We recognise that positive returns require the same level of review as negative ones. Specifically, a true performance evaluation requires a comprehensive analysis that evaluates both risks and returns. This multi-dimensional framework helps us flag and eliminate excessive risk-taking motivations among our managers.

Conclusion

We are nearing the end of our second annual investment competition. With a minimal commitment of time, the exercise yields impressive results. The challenge helps us better interact as a group. We find common ground around our core function as stewards for PERA members. Investments should occupy the majority of our discourse and the challenge enhances that commonality of purpose. It also creates a healthy desire and discipline to be the best at what we do by enabling us to identify behavioural biases that exist in the broader investment world. The resulting awareness improves our overall skill and judgement as a team. We look forward to continuing this competition in 2017 and beyond.

Jon Grabel is the chief investment officer of the Public Employees Retirement Association of New Mexico.

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Tags: game playing, internal investment team, investment competition, Jon Grabel, Public Employees Retirement Association of New Mexico, team work

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