SELLING: Financial Advice!

Join Our Mailing List

It is All About Sales

Rick Kahler MS CFP

By Rick Kahler MS CFP®

Steve Forbes, editor of the well-respected financial publication Forbes Magazine, once said,

“You make more selling advice than following it. It’s one of the things we count on in the magazine business, along with the short memory of our readers.”

Scores of publications sell advice on their proprietary investing secrets. In addition, hundreds of thousands of active money managers claim they can “beat the market” and give you above average returns. Usually, “the market” this advice refers to is the Standard & Poor’s 500 Index.

Investing in the S&P 500 Index simply means owning a fraction of every one of the largest 500 companies in the US. No skill is involved at all; a third grader can do this.

Accepting average market returns through an index fund is termed “passive” investing, while trying to beat the market is called “active” investing. Enticing as the latter may seem, very few active investors manage to do it.

Dimensional Fund Advisors

A recent study cited by Dimensional Fund Advisors found that only 17% of money managers beat the S&P 500 Index over 15 years. A similar study done by Dalbar, Inc. found that over 20 years, just 3% of money managers beat the S&P 500 Index. In other words, 97% of all money managers didn’t do as well as a third grader who invested in the S&P 500 Index.

In addition, active investors generally pay around 1.35% a year in fees, compared to around 0.20% a year for passive investors. According to the Dalbar study, the average active investor earns 3% to 4% less annually than the average passive investor. That’s a really big deal.

With all the research to the contrary, why does active investing flourish?

There are three reasons:

First, people are confused. Few investors understand that Wall Street has every financial incentive to keep you confused. So does much of the financial press, because passive investing doesn’t sell papers or magazines. We don’t see headlines reading, “What You Need To Do With Your Portfolio Now: NOTHING!”

Second, people tend to be extremely overconfident. Most of what people mistake for outperformance in a money manager is actually just dumb luck. According to Ken French, professor of finance at Dartmouth, it takes 64 years of data to sort through all the random probabilities to assess whether a manager’s short-term beating the market is due to skill rather than chance.

To emphasize this, try an experiment that can make you a stock-picking genius. Select 64 people, preferably not friends. Tell 32 of them the price of a share of Apple will be higher at the end of the month; tell the other 32 it will be lower. Of course, your “prediction” will be true for one group or the other. At the end of the month take the “true” group, divide it into two groups of 16, and repeat the exercise. At the end of the second month, divide the “true” group in half and repeat. Continue the pattern with the remaining 8, then 4, and the last 2. After six months you will have correctly predicted the movement of Apple stock to one person—who will think you are a financial genius.

The third reason active investing flourishes is the superior skill of the top 3%—the Bill Millers and Jim Simons. Such investment gurus provide encouragement that you, too, can beat the market. Yet actually, the fact they exist is exactly the reason why you shouldn’t try. Why?

Assessment

In order for them to do better than the market, they need lots of others to do worse. As Ken French reminds us, trying to beat the market is a zero sum game. 

***

investing

***

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

 Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™   Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

***

The “Fair Health” Study of Private Healthcare Claims

By Staff Reporters

Three [3] Key Findings

***

***

 •  Among patients aged 19-35, mental health conditions were the most common diagnosis associated with emergency ground ambulance in the period 2016-2020.
 •  Throughout the period 2016-2020, advanced-life-support (ALS) accounted for a larger percentage of emergency ground ambulance claim lines than basic-life-support (BLS) services. For example, in 2020, 51.5% of emergency ground ambulance claim lines were associated with ALS compared to 48.5% associated with BLS.
 •  Individuals 65 years and older were consistently the largest age group associated with emergency ground ambulance services, though their share of the distribution decreased from 37.7% in 2016 to 34% in 2020.

Source: Fair Health Via PR Newswire, “Ground Ambulance Services in the United States,” February 23, 2022

***

Comments Appreciated

THANK YOU

Subscribe to the Medical Executive-Post

***

***

***

UPDATE: Medical Debt, Credit Reports & Spring

By Staff Reporters

***

***

Medical Debt. The top three credit reporting agencies—Equifax, Experian, and TransUnion—said recently that they’ll remove most medical debt from consumers’ credit reports beginning this summer. This move will wipe out almost 70% of medical debts that can sometimes stick around for up to seven years on Americans’ credit reports and make it harder for them to buy a house, car, or take out other loans.

Spring: Today is the first day of Spring [aka the vernal equinox or one of two moments of the year when the Sun is exactly above the Equator].

***

HAPPY SPRING 2022

Editor-in-Chef: Dr. David Edward Marcinko MBA CMP™

COMMENTS APPRECIATED

Thank You

Subscribe to the Medical Executive-Post

***

***

****

The Three [3] Types of Banks

Join Our Mailing List Understanding Differences

[By Dr. David Edward Marcinko MBA CMP™]

SPONSOR: http://www.CertifiedMedicalPlanner.org

CMP logo

***

dem-thinkingThere are several different kinds of banks.

A general understanding of these types is suggested for any medical professional prior to launching a self-directed [ME, Inc], or even a guided investment strategy or wealth building portfolio effort with a financial advisor [FA], stock broker or wealth manager, etc.

This banking information is usually not included in any text on financial planning, or related, until now.

CITE: https://www.r2library.com/Resource/Title/082610254

Definition of Retail Bank

A retail bank is a typical small mass-market financial institution in which individual customers use local branches; usually of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).

Definition of Commercial Bank

A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs.

However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees.

Definition of Investment Bank

Investment banking activities are different than those of retail and commercial banking and include underwriting securities, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients.

***

Bankers

***

Assessment

This brief review provides a retrospective on implications for modernity.

More:

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

***

 

PODCAST: How Prescription Drug Coverage Really Works

By Eric Bricker MD

***

***

COMMENTS APPRECIATED

Thank You

Subscribe to the Medical Executive-Post

***

DICTIONARY HEALTH INSURANCE: https://www.amazon.com/Dictionary-Health-Insurance-Managed-Care/dp/0826149944/ref=sr_1_4?ie=UTF8&s=books&qid=1275315485&sr=1-4


***

%d bloggers like this: