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    As a former Dean and appointed University Professor and Endowed Department Chair, Dr. David Edward Marcinko MBA was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

    Professor David Marcinko was a board certified surgical fellow, hospital medical staff President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug, DME and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published academic text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Later, Dr. Marcinko was a vital and recruited BOD  member of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as mentor and coach for Deloitte-Touche and other start-up firms in Silicon Valley, CA.

    As a state licensed life, P&C and health insurance agent; and dual SEC registered investment advisor and representative, Marcinko was Founding Dean of the fiduciary and niche focused CERTIFIED MEDICAL PLANNER® chartered professional designation education program; as well as Chief Editor of the three print format HEALTH DICTIONARY SERIES® and online Wiki Project.

    Dr. David E. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA, FPA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

    Marcinko is “ex-officio” and R&D Scholar-on-Sabbatical for iMBA, Inc. who was recently appointed to the MedBlob® [military encrypted medical data warehouse and health information exchange] Advisory Board.



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Understanding and Using Portfolio Performance Benchmarks

Concerning Periodic Measurements and Meters

By Dr. David Edward Marcinko MBA, CMP™


The stock market has been booming lately; flirting with DJIA 12,000. Up almost 100% since March 2009, after being down almost 50%. And so, perhaps this is a good time to [re]-evaluate the performance of your investment portfolio[s]. But how?

Performance measurement has an important role in monitoring progress towards any physician’s portfolio’s goals.  The portfolio’s objective may be to preserve the purchasing power of the assets by achieving returns above inflation or to have total returns adequate to satisfy an annual spending need without eroding original capital, etc.  Whatever the absolute goal, performance numbers need to be evaluated based on an understanding of the market environment over the period being measured.

Time Weighted Return

One way to put a portfolio’s a time-weighted return in the context of the overall market environment is to compare the performance to relevant alternative investment vehicles.  This can be done through comparisons to either market indices, which are board baskets of investable securities, or peer groups, which are collections of returns from managers or funds investing in a similar universe of securities with similar objectives as the portfolio.  By evaluating the performance of alternatives that were available over the period, the physician investor and his/her advisor are able to gain insight to the general investment environment over the time period.

The Indices

Market indices are frequently used to gain perspective on the market environment and to evaluate how well the portfolio performed relative to that environment.  Market indices are typically segmented into different asset classes. 

Common stock market indices include the following:

  • Dow Jones Industrial Average- a price-weighted index of 30 large U.S. corporations.
  • Standard & Poor’s (S&P) 500 Index – a capitalization-weighted index of 500 large U.S. corporations.
  • Value Line Index – an equally-weighted index of 1700 large U.S. corporations.
  • Russell 2000 – a capitalization-weighted index of smaller capitalization U.S. companies.
  • Wilshire 5000 – a cap weighted index of the 5000 largest U.S. corporations.
  • Morgan Stanley Europe Australia, Far East (EAFE) Index – a capitalization-weighted index of the stocks traded in developed economies. 

Common bond market indices include the following:

  • Lehman Brothers Government Credit Index – an index of investment grade domestic bonds excluding mortgages [N/A].
  • Lehman Brothers Aggregate Index – the LBGCI plus investment grade mortgages [N/A].
  • Solomon Brothers Bond Index – similar in construction to the LBAI.
  • Merrill Lynch High Yield Index – an index of below investment grade bonds.
  • JP Morgan Global Government Bond – an index of domestic and foreign government-issued fixed income securities. 

The selection of an appropriate market index depends on the goals of the portfolio and the universe of securities from which the portfolio was selected.  Just as a portfolio with a short-time horizon and a primary goal of capital preservation should not be expected to perform in line with the S&P 500, a portfolio with a long-term horizon and a primary goal of capital growth should not be evaluated versus Treasury Bills.

While the Dow Jones Industrial Average and S&P 500 are often quoted in the newspapers, there are clearly broader market indices available to describe the overall performance of the U.S. stock market.  Likewise, indices like the S&P 500 and Wilshire 5000 are capitalization-weighted, so their returns are generally dominated by the largest 50 of their 500 – 5000 stocks.  While this capitalization-bias does not typically affect long-term performance comparisons, there may be periods of time in which large cap stocks out- or under-perform mid-to-small cap stocks, thus creating a bias when cap-weighted indices are used versus what is usually non-cap weighted strategies of managers or mutual funds. 

Finally, the fixed income indices tend to have a bias towards intermediate-term securities versus longer-term bonds.  Thus, an investor with a long-term time horizon, and therefore potentially a higher allocation to long bonds, should keep this bias in mind when evaluating performance.


RIP: Lehman Brothers

Peer group comparisons tend to avoid the capitalization-bias of many market indices, although identifying an appropriate peer group is as difficult as identifying an appropriate market index.  Further, peer group universes will tend to have an additional problem of survivorship bias, which is the loss of (generally weaker) performance track records from the database.  This is the greatest concern with databases used for marketing purposes by managers, since investment products in these generally self-disclosure databases will be added when a track record looks good and dropped when the product’s returns falter.  Whether mutual funds or managers, the potential for survivorship bias and inappropriate manager universes make it important to evaluate the details of how a database is constructed before using it for relative performance comparisons.


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5 Responses

  1. Dr. Marcinko

    According to http://www.thefinancebuff.com the best deal in financial advice comes from the Vanguard Financial Plan service. If your household invests $50,000 with Vanguard, you can get a financial plan from a Certified Financial Planner® for a one-time $250 fee. The plan will cover not only your investment with Vanguard but also your investments outside Vanguard. $250 is very reasonable to have a professional look over your investments and give you advice.

    For a portfolio size between $50,000 and $500,000, AssetBuilder offers investment advisory service at 0.43% – 0.50% a year. For an investment of $100,000, the fee is $450 a year. It costs more than the Vanguard plan but it’s still reasonable.

    For a portfolio over $500,000, Portfolio Solutions offers its service at 0.25% a year, subject to a $2,500/year minimum. Flat-fee advisors Cardiff Park Advisors and Evanson Asset Management also offer their services at similar fee levels.



  2. The NUMBER

    Hello Richard – Before any ME-P readers and colleagues give up all hope in owning some of the greatest businesses on the planet, here is a number about the S&P 500, derived by a student in the statistics class http://www.CertifiedMedicalPlanner.com of Professor Hope R. Hetico [Managing Editor] that might help to ease your mind.


    Yep. It’s hard to believe, but that is the compounded annual return of the S&P 500 between 1980 and 2010. And, that includes the tech bubble at the turn of the century and the financial meltdown in 2008, by the way.

    Any thoughts?

    Dr. David Edward Marcinko MBA CMP™


  3. Dr. Marcinko,

    The DOW closed down 284 points today, or at 11,125. Any thoughts?

    The BEAR


  4. It’s Back to the Future for the Federal Reserve

    BEAR – Faced with a lethargic economy and a jobless rate hovering at 9 percent, the nation’s central bank reached deep into its bag of tricks today and pulled out a move to spur growth that it hadn’t used in 50 years.

    The move, dubbed “Operation Twist” when it was first used in 1961, is intended to push long-term interest rates lower, which the Fed hopes will spur lending, induce businesses to expand and tempt consumers into spending more.


    But, will it work? I don’t think so. What about you and Dr. Marcinko?



  5. Dear Bear and Simon,

    One of the perquisites of running a successful healthcare administrative communications ecosystem is that I get to chime in from-time-to-time and voice my opinion to august readers and knowledgeable subscribers of our various publications, like you:

    ADMINISTRATORS: http://www.springerpub.com/Search/marcinko
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    ADVISORS: http://www.CertifiedMedicalPlanner.com
    BLOG: http://www.MedicalExecutivePost.com

    So – right to the point – I do agree with your sentiments and am too a [short-term] bear. In fact, I’ve opined and lectured around the country thusly, as well as warning about a double-dip recession, for the last several years. We’ve even posted and commented about it on this ME-P. However, [long-term] I am a bull and investment optimist.

    Here are 3 reasons why, courtesy of William Hammer, Jr, CFP®, writing in Financial Advisor, a print publication for the industry.


    If Dr. Joe Investor had put $100,000 into the S&P 500 in 1980 and not added or subtracted money through 2010, he would have multiplied his original investment by twenty-five times (assuming that he paid taxes from another source or enjoyed tax deferral). Even if you understand the miracle of compound interest, that number still has to blow your mind.


    It’s not just the television show that introduced us to Jack Bauer, but that number is how many times out of 31 calendar years Dr. Joe Investor had more money on December 31st, than he did at the beginning of that year. That’s a batting average of close to 80%.

    High returns and a lot of positive years, what’s the catch? Here’s where volatility plays a role.


    This number is the average intra-year decline of the index on a price basis only. In other words, at some point during the year, the S&P 500 dropped an average of 14% and caused emotions to run high. (By the way, if you included dividends, which the index never stopped paying at any time during those 30 years, the average intra-year decline was less than 14%).

    What might surprise you, and Dr. Joe, is that intra-year drops of 10% or more did not always lead to a loss for the calendar year.

    For example, as recently as 2009 and 2010, when large intra-year drops of 28% and 16% caused many investors to sell, there were still double-digit gains for those who stayed invested. There were even bigger gains for those who added heavily during these intra-year drops.

    So, still a stock market bear … BEAR? Not me.

    I am sitting patiently on the sidelines, accumulating cash, and poised to jump in when blood is in the streets, once again. As it always has been … and always will be.

    Candor – Intelligence and Goodwill

    Dr. David Edward Marcinko MBA CMP™


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