What is a Stock Market Index IMPLIED OPEN?

***

FINANCIAL TERMS AND DEFINITIONS FOR PHYSICIANS AND ALL INVESTORS

***

By Dr. David E. Marcinko MBA CMP®

https://certifiedmedicalplannerdotorg1.files.wordpress.com/2012/03/cmp-logo17.jpg

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

The stock markets have been near all time highs, lately. Physician colleagues and clients are so excited that they are even checking the overnight status of favorite stocks and/or the domestic/overseas markets.

***

Some colleagues are even becoming a bit OCD by checking the implied open of various markets the night before. But, what exactly is the Implied Open? How is it calculated?

DEFINITION: The Implied Open attempts to predict the prices at which various stock indexes will open, at 9:30am New York time. It is frequently shown on various cable television channels prior to the start of the next business day.

Product Details

CITE: https://www.r2library.com/Resource/Title/0826102549

EXAMPLE: Considering the DJIA as an example, the basis of calculating implied open is the price of a “DJX index option futures contract”. This is not the price of the DJIA itself but rather the current ticker price of an option issued by the Chicago Board Options Exchange.

CBOE: The Chicago Board Options Exchange, located at 400 South LaSalle Street in Chicago, is the largest U.S. options exchange with annual trading volume that hovered around 1.27 billion contracts at the end of 2014. CBOE offers options on over 2,200 companies, 22 stock indices, and 140 exchange-traded funds.

CALCULATION: https://www.quora.com/How-do-you-calculate-the-implied-open-from-futures

***

***

NOTE: We would like to remind you that new amendments adopted by the U.S. Securities Exchange Commission (SEC) have gone into effect as of September 28, 2021. These amendments restrict the ability of market makers to publish OTC quotations for those companies that have not made required current financial and company information available to regulators and investors.

***

YOUR COMMENTS ARE APPRECIATED.

Thank You

***

For Entrepreneurs and Investors, Discovering Truth Takes Time

 

For Investors, Discovering Truth Takes Time

 CFA

 

The Roman philosopher, playwright, statesman and occasional satirist Lucius Annaeus Seneca wasn’t talking about the stock market when he wrote that “time discovers truth,” but he could have been. In the long run a stock price will reflect a company’s (true) intrinsic value. In the short run the pricing is basically random.

Here are two real-life examples:

Let’s say you had the smarts to buy Microsoft in November 1992. It would have been a brilliant decision in the long run — the software giant’s stock has gone up manyfold since. But nine months later, in August 1993, that call did not look so brilliant: Microsoft shares had declined 25 percent in less than a year. In fact, it would have taken you 18 months, until May 1994, for this purchase to break even. Eighteen months of dumbness?

In the early ’90s the PC industry was still in its infancy. Microsoft’s DOS and Windows operating systems were de facto standards. Outside of Macs and a tiny fraction of IBM computers, every computer came preinstalled with DOS and Windows. Microsoft had a pristine balance sheet and a brilliant co-founder and CEO who would turn mountains upside down to make sure the company succeeded. The above sentence is infested with hindsight — after all, that was almost 30 years ago. But Microsoft clearly had an incredible moat, which became wider with every new PC sold and every new software program written to run on Windows.

Here is another example. GoPro is a maker of video cameras used by surfers, skiers and other extreme sports enthusiasts. If you had bought the stock soon after it went public, in 2014, you would have paid $40 a share for a $5.5 billion–market-cap company earning about $100 million a year — a price-earnings ratio of about 55. Your impatience would, however, have been rewarded: The stock more than doubled in just a few short months, hitting $90.

Would it have been a good decision to buy GoPro? The company makes a great product — I own one. But GoPro has no moat. None. Most components that go into its cameras are commodities. There are no barriers to entry into the specialized video camera segment. Most important, there are no switching costs for consumers. Investors who bought GoPro after its IPO paid a huge premium for the promise of much higher earnings from a company that might or might not be around five years later.

***

What is even more interesting is that some of those buyers were then selling to even bigger fools who bought at double the price a few months later. GoPro was a momentum stock that was riding a wave about to break. Fast-forward a year and GoPro sales are collapsing, so now the stock is trading in the low teens ($11.65 as of this writing).

These two examples bring us to the nontrivial topics of complex systems and nonlinearity. My favorite thinker, Nassim Taleb, wrote the following in his book Antifragile: Things That Gain from Disorder: “Complex systems are full of interdependencies — hard to detect — and nonlinear responses. ‘Nonlinear’ means that when you double the dose of, say, a medication, or when you double the number of employees in a factory, you don’t get twice the initial effect, but rather a lot more or a lot less.”

The stock market is a complex system where in the short term there are few if any interdependencies between decisions and outcomes. In the short run stock prices are driven by thousands of random variables. Stock market participants have different risk tolerances and emotional aptitudes, and diverse time horizons ranging from milliseconds (for high-speed traders) to years (for long-term investors).

Assessment

In other words, predicting where a stock price will be in a day, a month or even a year is not much different from prognosticating whether the ball on a roulette wheel will land on red or black. In the longer run, however, good decisions should pay off because fundamentals will shine through — just as was the case with buying Microsoft in 1992 and not buying GoPro in 2014. But in the short run there is no correlation between good decisions and results. None!

Whenever you look at your portfolio, think of the Microsoft and GoPro examples above. The performance of your stocks in the short run tells you absolutely nothing about what you own or about the quality of your decisions. You may own a portfolio of Microsofts, and its value is still going down because at this juncture the market doesn’t care about Microsofts. Or maybe you stuffed your retirement fund with overpriced fads that may not be around a year from now. But in the longer run, which always lies out there past the short run, time discovers truth, as Seneca said.

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.

Book Marcinko: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

Subscribe: MEDICAL EXECUTIVE POST for curated news, essays, opinions and analysis from the public health, economics, finance, marketing, IT, business and policy management ecosystem.

MORE FOR DOCTORS AND NURES:

“Insurance & Risk Management Strategies for Doctors” https://tinyurl.com/ydx9kd93

“Financial Management Strategies for Hospitals” https://tinyurl.com/yagu567d

“Operational Strategies for Clinics and Hospitals” https://tinyurl.com/y9avbrq5

***

Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

“ENTERPRISE METAVERSE” Innovation and Entrepreneurship

WHAT IS IT?

On an earnings call last year Microsoft CEO Satya Nadella said the term “enterprise metaverse.”

By Dr. David Edward Marcinko MBA

DEFINITION: The Metaverse is a collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual space, including the sum of all virtual worlds, augmented reality, and the Internet.

The word “metaverse” is made up of the prefix “meta” (meaning beyond) and the stem “verse” (a back formation from “universe“); the term is typically used to describe the concept of a future iteration of the internet, made up of persistent, shared, 3D virtual spaces linked into a perceived virtual universe.

INVITE DR. MARCINKO: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

Thank You

***

YOUR THOUGHTS are appreciated.

PODCAST: Physician Entrepreneurial Tips on Opening Your Own Medical Practice

***

By MEDICAL ECONOMICS

James Underberg, MD, discusses how he left a large health system to open his own practice, and provides tips for physicians considering the same move.

***

***

Private Healthcare Equity: https://www.youtube.com/watch?v=tBwHu1uigoA

ME-P Business Plan: https://medicalexecutivepost.com/2022/04/05/get-your-free-medical-office-start-up-business-plan-from-imba-inc/

***

COMMENTS APPRECIATED

Thank You

***

***

***

****

Recognizing the Differences between Healthcare and Other Industries

Join Our Mailing List

Why Hospitals, Clinics and Medical Offices are Not Hotels, or Manufacturing Plants or Production Assembly Lines, etc.

By Dr. David E. Marcinko FACFAS, MBA, CMP™

[Editor-in-Chief]

The rising cost of health insurance remains a major concern for business; despite the Affordable Care Act [ACA] of March 2010. Local and national news publications have trumpeted that healthcare costs are not just rising but are growing in proportion to the cost of other goods and services.

Many of these publications have expressed the widely held view that because of the “inflation gap,” the cost of medical expenses needs curbing.  Proponents of this viewpoint attribute the growth in the gross domestic product (GDP) devoted to personal medical services (from 5% in 1965 to approximately 14% in 2005 and 17% in 2012) to increases in both total national medical expenditures as well as prices for specific services, and then conclude that there is a need to rein in the growing costs of healthcare services for the average American, even if it be through a legislative mandate.

Healthcare Is the Economy

According to colleague Robert James Cimasi MHA, AVA, CMP™ of Health Capital Consultants LLC in St. Louis, MO, healthcare cannot be separated from the economy at large. Although economists have cited the aging population as the reason for the increase in healthcare’s share of the GDP, other voices assert that financial greed among HMOs, pharmaceutical companies, hospitals, and medical providers like doctors and nurses is responsible.  In reality, the rise in healthcare expenditures is, at least in large part, the result of a much deeper economic force.

www.CertifiedMedicalPlanner.org

As economist William J. Baumol of New York University explained in a November 1993 New Republic article: “the relative increase in healthcare costs compared with the rest of the economy is inevitable and an ineradicable part of a developed economy. The attempt [to control relative costs] may be as foolhardy as it is impossible”.

Baumol’s observation is based on documented and significant differences in productivity growth between the healthcare sector of the economy and the economy as a whole.

Low Productivity Growth

Healthcare services have experienced significantly lower productivity growth rates than other industry sectors for three reasons, according to Cimasi:

1) Healthcare services are inherently resistant to automation. Innovation in the form of technological advancement has not made the same impact on healthcare productivity as it has in other industry sectors of the economy.  The manufacturing process can be carried out on an assembly line where thousands of identical (or very similar) items can be produced under the supervision of a few humans utilizing robots and statistical sampling techniques (e.g., defects per 1,000 units). The robot increases assembly line productivity by accelerating the process and reducing labor input. In medicine, most technology is still applied in a patient-by-patient manner — a labor-intensive process. Patients are cared for one at a time. Hospitals and physician offices cannot (and, most would agree, should not) try to operate as factories because patients are each unique and disease is widely variable.

2) Healthcare is local. Unlike other labor-intensive industries (e.g., shoe making), healthcare services are essentially local in nature. They cannot regularly be delivered from Mexico, India or Malaysia.  They must be provided locally by local labor.  Healthcare organizations must compete within a local community with low or no unemployment among skilled workers for high quality and higher cost labor.

3) Healthcare quality is — or is believed to be — correlated with the amount of labor expended. For example, a 30-minute office visit with a physician is perceived to be of higher quality than a 10-minute office visit. In mass production, the number of work-hours per unit is not as important a predictor of product quality as the skills and talents of a small engineering team, which may quickly produce a single design element for thousands of products (e.g., a common car chassis).

Assessment

Healthcare suffers a number of serious consequences when its productivity grows at a slower rate than other industries, the most serious being higher relative costs for healthcare services. The situation is an inevitable and ineradicable part of a developed economy.

For example, as technological advancements increase productivity in the computer, and eHR, manufacturing industry, wages for computer industry labor likewise increase. However, the total cost per computer produced actually declines.  But in healthcare (where technological advancements do not currently have the same impact on productivity), wage increases that would be consistent with other sectors of the economy yield a problem: the cost per unit of healthcare produced increases.

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.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

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:

DICTIONARIES: http://www.springerpub.com/Search/marcinko
PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors

Product DetailsProduct DetailsProduct Details

Product DetailsProduct Details

Product Details

Honoring Memorial Day 2022

NOT Just a Three Day Weekend

***

Memorial day

***

Healthcare LOGISTICS Survey

By MCOL

***

***

4 Key Take-Aways

 •  87% of nurses said that medical courier deliveries—or lack thereof—impacted their work weekly.
 •  32% of nurses have created a “secret stash” of supplies.
 •  27% have personally transported an item to another facility in the past year to overcome courier issues.
 •  19% said that errors or delays impacted their ability to provide patient care five or more times per month.

Source: American Nurse Journal via Businesswire

***

COMMENTS APPRECIATED

Thank You

***

***

****

%d bloggers like this: