PARADOX OF EDUCATION: Cumulative Advantage and Disadvantage

By Staff Reporters

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Classic Definition: Social status snowballs in either direction because people like associating with successful people, so doors are opened for them, and avoid associating with unsuccessful people, for whom doors are closed.

Modern Circumstance: Education’s positive effect on health gets larger as people age. The large socioeconomic differences in health among older Americans mostly accrue earlier in adulthood on gradients set by educational attainment. Education develops abilities that help individuals gain control of their own lives, encouraging and enabling a healthy life.

Paradox Example: The health-related consequences of education accumulate on many levels, from the socioeconomic (including work and income) and behavioral (including health behaviors like exercising) to the physiological and intra-cellular. Some accumulations influence each other.

In particular, a low sense of control over one’s own life accelerates physical impairment, which in turn decreases the sense of control. That feedback progressively concentrates good physical functioning and a firm sense of personal control together in the better educated while concentrating physical impairment and a sense of powerlessness together in the less well educated, creating large differences in health in old age.

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EDUCATION: Books

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IPO: Road Show with Pros and Cons

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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What Is a Roadshow?

In general, a roadshow is a series of meetings or presentations in which key members of a private company, usually executives, pitch the initial public offering, or IPO, to prospective investors. Effectively, the company is taking its branding message on the road to meet with investors in different cities, hence the name.

The IPO roadshow presentation is an important part of the IPO process in which a company sells new shares to the public for the first time. Whether a company’s IPO succeeds or not can hinge on interest generated among investors before the stock makes its debut on an exchange.

There are also some cases where company executives will embark on a road show to meet with investors to talk about their company, even if they’re not planning an IPO.

Pros and Cons of a Roadshow

According to Rebecca Lake, if the company goes public and no one buys its shares, then the IPO ends up being a flop, which can affect the company’s success in the near and long term. If the company experiences an IPO pop, in which its price goes much higher than its initial offering price, it could be a sign that underwriters mispriced the stock.

A roadshow is also important for helping determine how to price the company’s stock when the IPO launches. If the roadshow ends up being a smashing success, for example, that can cause the underwriters to adjust their expectations for the stock’s IPO price.

On the other hand, if the roadshow doesn’t seem to be generating much buzz around the company at all, that could cause the price to be adjusted downward.

In a worst-case scenario, the company may decide to pull the plug on the IPO altogether or to go a different route, such as a private IPO placement.

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MAGNIFICENT SEVEN: Companies Defined

By Copilot

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The “Magnificent Seven” refers to a group of seven technology giants that have significantly influenced the stock market. These companies are:

  1. Alphabet (GOOGL)
  2. Amazon (AMZN)
  3. Apple (AAPL)
  4. Meta Platforms (META)
  5. Microsoft (MSFT)
  6. Nvidia (NVDA)
  7. Tesla (TSLA)

Why Are They Significant?

These companies are at the forefront of technological innovation, driving advancements in artificial intelligence, cloud computing, e-commerce, social media, and electric vehicles. Their market dominance and financial performance have a substantial impact on major stock indices like the S&P 5002.

Performance

  • Alphabet: Despite a 31% climb over the past year, Alphabet remains the cheapest of the group, trading at 20 times forward earnings estimates.
  • Amazon: Amazon’s cloud unit is delivering an annual revenue run rate of $115 billion thanks to its AI offerings.
  • Apple: Apple has seen a 989% total return for investors over the past decade.
  • Meta Platforms: Meta is the best-performing stock year-to-date among the Magnificent Seven, up over 25%.
  • Microsoft: Microsoft has generated a 989% total return for investors over the past decade.
  • Nvidia: Nvidia remains the best performer over the past year, up 55%.
  • Tesla: Tesla is the worst-performing stock in the group for 2025, down 25.66% year-to-date.

These companies have reshaped industries and become powerhouses in the global economy, wielding significant influence over market trends and investor sentiment.

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EDUCATION: Books

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HONEYPOTS versus HONEYNETS: Information Technology

By Staff Reporters

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What is Honeypot?

A Honeypot is a network-attached system used as a trap for cyber-attackers to detect and study the tricks and types of attacks used by hackers. It acts as a potential target on the internet and informs the defenders about any unauthorized attempt at the information system.

Honeypots are mostly used by large companies and organizations involved in cybersecurity. It helps cybersecurity researchers to learn about the different types of attacks used by attackers. It is suspected that even cyber criminals use these honeypots to decoy researchers and spread wrong information. The cost of a honeypot is generally high because it requires specialized skills and resources to implement a system such that it appears to provide an organization’s resources while still preventing attacks at the back end and access to any production system.

Advantages of Honeypot

  • Acts as a rich source of information and helps collect real-time data.
  • Identifies malicious activity even if encryption is used.
  • Wastes hackers’ time and resources.
  • Improves security.

Disadvantages of Honeypot

  • Being distinguishable from production systems, it can be easily identified by experienced attackers.
  • Having a narrow field of view, it can only identify direct attacks.
  • A honeypot once attacked can be used to attack other systems.
  • Fingerprinting(an attacker can identify the true identity of a honeypot ).

What is Honeynet?

A honeynet is made up of two or more honeypots connected via a network. Having a linked network of honeypots can be beneficial. It allows organizations to trace how an attacker interacts with a single resource or network point while also monitoring how a hacker moves between network points and interacts with numerous points at the same time.

The goal is to induce hackers to believe that they have successfully breached the network. Having more false network destinations makes the arrangement appear more realistic.

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EDUCATION: Books

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STOCK DIVIDENDS: Company Earnings Distribution

BY DR. DAVID EDWARD MARCINKO; MBA MEd CMP™

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SPONSOR: http://www.MarcinkoAssociates.com

DEFINITION

If the definition of a security is title to a stream of cash flows, then the dividends a company is expected to pay to equity shareholders on a periodic basis (e.g., quarterly) are a clear source of return for an investor.  A dividend is simply a distribution of (some portion of) the company’s earnings to equity shareholders.  Like a bond yield, a stock’s dividend yield can be used to measure the income return on the stock. 

To determine a stock’s dividend yield, the trailing year’s dividends per share paid are divided by the current stock price.  However, a key difference between a dividend yield and a bond yield is the level of certainty that can be assumed regarding future payments, since a bond’s coupon is generally predetermined and its payment is expected to be senior to the payment of dividends.

After a company has determined that it has earned a profit, management has to decide what to do with those profits.  One choice is to distribute the earnings to shareholders in the form of dividends, while another option is to reinvest the profits in the company.  A company’s management may determine that the shareholders interest is best served by using the earnings to pursue growth opportunities (e.g., capital expansion, research & development, etc.) at the corporate level.  Thus, when management believes that its investment opportunities are likely to produce a higher return than what investors’ could generate with their dividends or that reinvestment is needed to maintain its financial strength, the company will retain the earnings. 

One of the biggest myths in investing is capital appreciation accounts for the largest part of investors’ gains. Dividends, or cash payments to shareholders, actually account for a substantial part of an equity investor’s total return. In fact since 1926, dividends have accounted for more than 40% of the total return of the S&P 500 stock index. In the last decade (2000-2009), the S&P 500’s total return of -9% would have been a heftier loss of -24% had it not been for the 15% contribution from dividends.

History has shown that dividends have been a powerful source of total return in a diversified investment portfolio, especially during periods of market turbulence. In examining the prior eight decades of stock market performance, dividends often account for more than 2/3 of the total return (1930s, 1940s, 1970s, & 2000s).  If an investor avoided dividend paying stocks during these elongated time periods, most of the total gains would be lost. 

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DIVIDEND CONTRIBUTION OF S&P 500 RETURN BY DECADE   
 S&P 500 CumulativeDividendsAverage 
 Price %DividendTotal% of TotalPayout 
YearsChangeContribution*ReturnReturnRatio** 
       
1930s-41.9%56.0%14.1%>100%90.1% 
1940s34.8%100.3%135.0%74.3%59.4% 
1950s256.7%180.0%436.7%41.2%54.6% 
1960s53.7%54.2%107.9%50.2%56.0% 
1970s17.2%59.1%76.4%77.4%45.5% 
1980s227.4%143.1%370.5%38.6%48.6% 
1990s315.7%117.1%432.8%27.0%47.6% 
2000s-24.1%15.0%-9.1%>100%35.3% 
2010s27.9%8.4%36.3%23.1%28.4% 
as of 12/31/12      

Source: Strategas

During those decades such as the 2000s where the stock market struggled to advance, dividends were a significant element for investor survival.  This is not only due to the dividends alone, but also the risk element of stocks that pay dividends.  Dividend stocks have historically provided lower overall volatility and stronger downside protection when markets decline. Since 1927, dividend stocks have consistently held up better than the broader market during downturns. You can measure downside risk through a statistic known as downside capture ratio.

Downside capture ratio is a statistical measure of overall performance in a down stock market. An investment category, or investment manager, who has a down-market ratio less than 100 has outperformed the index during a falling stock market. 

For example, a down-market capture ratio of 80 indicates that the portfolio measure declined only 80% as much as the index during the period. The downside capture ratio of high-dividend-yielding stocks, since 1927, has been 81% or lower over various long-term periods.  Put a better way, during months that the S&P 500 stock index fell, dividend stocks declined by nearly 19% less than the broader market.

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DOWNSIDE AND UPSIDE CAPTURE RATIOS OF HIGH DIVIDEND STOCKS – 1927 TO 2011  
The lower the number, the better    
                                                                            Downside 
                                                                              Capture Ratio 
   
Since 192781.53 
50-year67.45 
30-year65.86 
20-year65.83 
10-year81.61 
   

Source: Kenneth French as of 12/31/11

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com 

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