BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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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.
Posted on March 2, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
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:
Alphabet (GOOGL)
Amazon (AMZN)
Apple (AAPL)
Meta Platforms (META)
Microsoft (MSFT)
Nvidia (NVDA)
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.
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
Cumulative
Dividends
Average
Price %
Dividend
Total
% of Total
Payout
Years
Change
Contribution*
Return
Return
Ratio**
1930s
-41.9%
56.0%
14.1%
>100%
90.1%
1940s
34.8%
100.3%
135.0%
74.3%
59.4%
1950s
256.7%
180.0%
436.7%
41.2%
54.6%
1960s
53.7%
54.2%
107.9%
50.2%
56.0%
1970s
17.2%
59.1%
76.4%
77.4%
45.5%
1980s
227.4%
143.1%
370.5%
38.6%
48.6%
1990s
315.7%
117.1%
432.8%
27.0%
47.6%
2000s
-24.1%
15.0%
-9.1%
>100%
35.3%
2010s
27.9%
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
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
In 1972, Nobel Laureate Kenneth J. Arrow, PhD shocked academe’ by identifying health economics as a separate and distinct field. Yet, the seemingly disparate insurance, tax, risk management and financial planning principles that he also studied are just now becoming transparent to some medical professionals and their financial advisors. Despite the fact that a basic, but hardly promoted premise of this new wave financial planning era, is imprecision.
Nevertheless, to informed cognoscenti like Certified Medical Planners™, the principles served as predecessors to the modern physician-focused financial advisory niche sector. In 2004, Arrow was selected as one of eight recipients of the National Medal of Science for his innovative views.
And now, as a long bull market may be over, and if the current “new-normal” prevails – meaning a 4.5% real annualized rate of return on equities and a 1.5% real rate on bonds – wealth accumulation for all may be reduced.
An Imprecise Science
There is a major variable, dominant in any marketplace that pushes an economy in a forward direction. It is called consumerism. This became apparent while waiting in a doctor’s office one recent afternoon.
Scenario:
The front office receptionist, who appeared to be about 21 years old, was breaking for lunch and her replacement, who appeared not much older, came over to assist. Realizing the propensity for a long wait, one was taken by the size of waiting room and the number of patients coming in and out of the office. [Americans consume healthcare and a lot of it]. There was another notable peculiarity. The sample prescription bags being carried out the door were no match for the bags under everyone’s eyes, including the doctor’s. The office staff was probably working overtime, if not two jobs, and the doctor was working harder and faster in a managed care system.
Assessment
Why? So they all could afford to buy and voraciously consume for their children and themselves. Americans indeed work longer hours than any other industrialized nation.
Conclusion
Finally, as women medical professionals entered the workforce in unprecedented numbers, the stock markets reached an all time high in 2025, even as money was spent at a feverish pace as the Federal Reserve pumped out money in inflammatory fashion.
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
Investing in Growth Stocks – Catching the Momentum [BIG-MO]
The growth style of investing focuses on companies with strong earnings and accelerating capital growth. A growth investor will make investment decisions based on forecasts of continuing growth in earnings. Growth investing emphasizes qualitative criteria, including value judgments about the company, its markets, its management, and its ability to extract future earnings growth from the particular industry.
Quantitative indicators of interest to the growth investor include high Price/Earnings ratios, Price/Sales ratios, and low dividend yields. A high P/E ratio suggests that the market is prepared to pay more per share in anticipation of future earnings. A low dividend yield suggests that the company is reinvesting rather than distributing profits. These indicators are considered in relation to the company’s immediate competitors. The companies with the highest P/E ratios relative to their industry will often be dominant within their market segment and have strong growth prospects. Growth investors will generally focus on premium and leading-edge companies.
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Some industry sectors by their nature have stronger growth characteristics, particularly more innovative and speculative industries.
For example, during the bull market run on the U.S. stock markets during the late 1990s, the technology sector was a major area of growth investment. On observing strong earnings growth, a growth investor will decide whether to buy shares based on whether the company’s growth is going to continue at its present rate, to increase, or to decrease. If it is expected to increase, the growth investor will consider it a candidate for purchase. The key research question is: at what point will the company’s growth flatten out, or fall? If a company’s growth rate slows or reverses, it is no longer attractive to a growth investor. Growth investors are normally prepared to pay a premium for what they believe to be high quality shares. The potential downside in growth investing is that if a company goes into sudden decline and the share price falls, you can lose capital value rapidly.
Growth stocks, like the current “Magnificent-Seven“, carry high expectations of above-average future growth in earnings and above-average valuations. Investors expect these stocks to perform well in the future and are willing to pay high P/E multiples for this expected growth. The danger is that the price may become too high. Generally, once a company sports a P/E ratio above 50, the risk significantly escalates. Many technology growth stocks traded at a P/E ratio of above 100 during 1999. This is unsustainable. No company in the history of the stock market has been able to maintain such a high P/E level for a sustained period of time.
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: MarcinkoAdvisors@outlook.com
Posted on February 26, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
BREAKING NEWS
By Staff Reporters
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WASHINGTON, Feb 25 (Reuters) – U.S. President Donald Trump signed an executive order on Tuesday aiming to improve price transparency on healthcare costs by directing federal agencies to strictly enforce a 2019 order he signed during his first term.
The order directs the Departments of the Treasury, Labor, and Health and Human Services to within 90 days come up with a framework to enforce Trump’s 2019 executive order forcing health insurers and hospitals to disclose healthcare cost details.
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This includes requiring the disclosure of actual prices not estimates, update existing guidance or proposing new regulations that ensure price information is standardized, and updating or issuing enforcement policies that guarantee compliance.
“You’re not allowed to even talk about it when you’re going to a hospital or see a doctor. And this allows you to go out and talk about it,” Trump told reporters as he signed the order. “It’s been unpopular in some circles because people make less money, but it’s great for the patient.”
Posted on February 25, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
DEFINITION
“Show Me the Money”
By Staff Reporters
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In some situations, an inheritance might complicate an estate and add to the estate tax burden. If there are sufficient assets and income to accomplish financial goals, more assets are not needed. A disclaimer may be useful. This is an unqualified refusal to accept a gift or inheritance, that is, when you “just say no”. You have decided not to accept a sizable gift made under a will, trust or other document.
When you disclaim the property, certain requirements must be met:
The disclaimer must be irrevocable;
The refusal must be in writing;
The refusal must be received within nine months;
You must not have accepted any interest in the property; and
As a result of the refusal, the property will pass to someone else.
The property passes under the terms of the decedents will, as if you had predeceased the decedent. If the filer of the disclaimer has control, the property will be included in the disclaimant’s estate and can only be passed to another as a gift for as an inheritance. The intent of the disclaimer is to renounce and never take control of the property.
While in Omaha for the Berkshire Hathaway annual meeting one year, I participated in an investment panel hosted by a local chapter of the Young Presidents’ Organization. I had the privilege of sharing the stage with such industry giants as Tom Russo, a partner of Gardner Russo & Gardner (famous for knowing more about consumer stocks than the management that runs them), and Tom Gayner, president and CIO of Markel Corp., a specialty insurance company that on many levels resembles the Berkshire of 30 years ago.
We were asked how much time a value investor should spend on macro forecasting. Usually macro forecasting is frowned upon in the value investing community, and Berkshire CEO Warren Buffett has everything to do with that. He is famous for saying (and I am paraphrasing), “My decision making would not change even if I knew what the Federal Reserve will do with interest rates next month.” There is sound logic behind this: Forecasting the economy is incredibly difficult in the short run. The economy is not unlike a black box with hundreds of gauges on it that in the near term give you conflicting readings about what’s inside it.
For this reason macro forecasting was disapproved of by value investors, and for 20 years this attitude paid off. The economic climate was favorable, the stock market was in overdrive, price-earnings ratios were expanding. Macro did not matter — until the housing bubble and financial crisis. Value investors who had had their heads in the sand got annihilated.
Things in life often swing, pendulum-like, from one extreme to another. Right after a crisis every investor is a macro expert. It’s kind of hilarious: Investors who just a few years earlier didn’t even know the names of most economic indicators are now spitting them out in conversations as though they had absorbed them with their mother’s milk. So what should investors do — become macro experts or economic ignoramuses?
Believe it or not, there is a logical and, more important, a practical answer to this question. As an investor you want to spend very little time on forecasting the weather (that is, what the Fed will do with interest rates next month or the rate of growth of the economy). Weather forecasting, first of all, is not always accurate, but it will certainly consume a lot of time and energy, and the forecasts have a very finite shelf life. Yesterday’s weather is irrelevant today. As long as you own companies that can survive rain without catching pneumonia — even a few weeks of rain — weather forecasting is a waste of time. This is what Buffett was implying by saying he didn’t want to be a macro forecaster.
However, instead of being a weatherman (or weatherwoman), as an investor you want to pay serious attention to “climate change” — significant shifts in the global economy that can impact your portfolio. This is exactly what Buffett did over the past few decades — he was warning about the weak dollar because of trade-deficit imbalances (he even put on a trade that bet against the dollar). He also warned about derivatives — “weapons of mass destruction” — and tried to cleanse them from the portfolio of General Re (an insurance company Berkshire acquired) as fast as he could.
Posted on February 24, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The Reform of “Free” State Education: Arthur Seldon and the Education Voucher Scheme (1957-88), Hsiao-Yuh KuHistory of Education: , v53 n4 p748-772 2024
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Arthur Seldon (1916-2005) was a significant British neo-liberal economist in the second half of the twentieth century. From 1957 to 1988, as the “engine room” of the Institute of Economic Affairs, Seldon had been advocating the reform of “free” state education. He vigorously argued for education vouchers, by which each parent could be provided with purchasing power and school choice.
From the mid-1960s, his ideas gradually attracted the attention of the Conservatives and contributed to the rise of the New Right and Thatcherism in the 1980s. Despite this, previous literature seldom explores Seldon’s work in relation to education in greater depth. To fill the lacuna, this paper aims to provide a deeper understanding of Seldon’s neo-liberal ideas about education and his approaches in promoting reform agenda.
Posted on February 24, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
FULL ARTICLE WITH TAKE AWAY POINTS
By Vitaliy Katsenelson CFA
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Key Take Away Points
The Consumer Electronics Show revealed that robotaxis are expanding beyond just Waymo, with multiple players entering the market – this fragmentation could actually benefit Uber’s switchboard system and transform sectors like school transportation.
Chinese EV manufacturers have leapfrogged traditional auto manufacturing much like Africa skipped landlines for mobile phones – their fresh designs and cost advantages could seriously challenge Western incumbents if tariffs weren’t a factor.
Autonomous and remote-controlled equipment is set to revolutionize traditional industries like construction, mining, and farming – transforming physically demanding jobs into office work and potentially reshaping immigration policy needs.
The path to cracking the US market has fundamentally changed – companies no longer need traditional retail gatekeepers like Best Buy or Costco, just a product and Amazon advertising budget, as demonstrated by companies like Renpho.
Brand value remains crucial in an era of rapid technology commoditization – your observations of the 15 Oura ring competitors and the GoPro story demonstrate that without strong brand differentiation, even good products can’t command premium pricing in today’s market.
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Full Article
I wrote this from Las Vegas, where my son Jonah and I were at CES (the Consumer Electronics Show).
In investing and life, it’s very easy to get tunnel vision – doing what works and staying in your comfort zone. I wanted to attend CES to shake myself out of this pattern.
It’s hard to describe how massive this event is. It sprawls through five enormous pavilions at the Las Vegas Convention Center and takes up two floors of the Venetian Hotel. It is attended by over one hundred thousand people.
Here are my initial, off-the-cuff, somewhat random thoughts from CES.
Robotaxis There were several robotaxi companies here, in addition to Alphabet’s Waymo. Multiple robotaxis are going to hit the market over the next few years; it won’t be just Waymo. Most will start geofenced (they’ll work in specific areas), just like Waymo did.
This is good news for Uber: The more fragmented the robotaxi market, the more players are in this market, the more valuable is Uber’s switchboard system (which will bring higher utilization to robotaxi operators).
This will also hugely transform public transportation. Think about school buses – that market is primed for disruption since most buses follow the same route every day in a relatively small area.
Chinese EVs Chinese electric cars are awesome. This reminds me of what happened in Africa. Most of Africa skipped phone landlines completely and went straight to wireless phones. Similarly, Chinese automakers weren’t great at making regular gas-powered cars (everyone else had dominated that space), so they just leapfrogged straight to electric cars. And leapfrog they did – they’ll make even Tesla work hard.
I can’t speak for their reliability, but their designs are fresh; and without labor unions mandating how many workers need to screw in a single lightbulb, they’re much cheaper than Western alternatives.
If they hit the US market without tariffs, they would decimate the incumbents – similar to what Japanese carmakers did in the early 80s to the Big Three.
Machines on Autopilot Autonomous and remote-controlled equipment is going to change construction, mining, and farming completely. Imagine excavators digging dirt on a project in the middle of nowhere, operated remotely from air-conditioned urban offices – maybe even by experienced operators brought out of retirement.
Jobs that were physically demanding and that pulled workers away from their families are going to become regular nine-to-five office jobs. This means workers can have normal family lives and work longer – way past when they’d normally have to retire due to the physical demands of the job.
Or picture a colony of Caterpillar trucks working autonomously 24/7 at a mine site. The efficiency and safety gains would be huge. You’ll still need workers, but different workers, and fewer of them.
Think about agriculture. All those jobs that “Americans don’t want to do” will be done by tractors or other farm equipment going through strawberry fields, using AI to spray pesticides only where needed and collecting apples and oranges.
Here’s an economic observation with slight policy overtones: The nature of the job market will change. This is one of those turning points in history where our immigration policy should be forward-thinking, adjusted for the world where AI will be playing a larger role in it (that is inevitable), not just focused on the past and today’s needs.
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Cracking the US Market China has a significant competitive advantage in manufacturing; it has a very robust ecosystem and well-oiled supply chain – nothing new here. Its labor is no longer the cheapest, but Chinese manufacturing is getting more automated.
We talked to one of the chief designers of Renpho, a Hong Kong company that makes digital scales (among other gadgets) and is the number one seller of those scales on Amazon. They outsource all manufacturing to China, and the factory that manufactures their scales is completely automated.
What’s also interesting is that in the past, to break into the US market, you had to have relationships with Best Buy and Costco. They were the gatekeepers and also the quality-control testers. Today, all you need is a product. You have direct access to the US consumer through Amazon – you just have to be willing to spend on Amazon advertising to promote your product.
Brand or Bust It’s incredible how fast technology gets commoditized. There are literally fifteen (!) companies selling Oura-like rings (sleep-tracking biometric devices worn as a ring; I’ve been wearing one for five years).
In technology, you need to keep moving all the time or you’ll be eaten by the competition (true in life in general), but you also need a strong brand. I couldn’t tell the difference between my Oura ring and the fifteen replicas, most of them sold at a fraction of Oura’s price. But I trust Oura, and that’s the power of the brand.
I remember researching GoPro stock after it got bombed out (down 80%). During our research, I found that GoPro was selling their cameras for $300-400, while Chinese-made, no-name replicas were sold on Amazon for $40. These replicas didn’t have GoPro’s brand, but they had tens of thousands of five-star (hard to fake) reviews on Amazon. GoPro may have been exceptional (loved by pros), and these no-name cameras were just okay, but they were 10 times cheaper.
I put GoPro stock into the “too hard” pile and moved on – thank God I did; after declining 80%, the stock fell another 80%.
This brings me back to the value of a brand. GoPro wasn’t worth 10x more to consumers than Chinese no-name alternatives. Can Oura command 10x pricing over its no-name competitors? I don’t know. That’s the beauty of investing – I don’t have to have an actionable opinion on everything. With time I have become very comfortable saying “I don’t know.” Investing is one of the few professions where you don’t have to have an answer for everything. “I don’t know” should be the default answer, unless you do know. Which isn’t that often.
Global Tech Showdown Korean companies are really dominating screen technology. LG and several other Korean companies showed off transparent, glass-like LCD screens at CES. Imagine sitting in your self-driving car, and your windows are both regular see-through glass and LCD screens at the same time. Our lives are slowly becoming what we used to see in sci-fi movies, and these screens are definitely a leap in that direction.
CES is a truly global show, with technology on display that spans every aspect of our future. There were a lot of companies from Asia (especially China). In certain pavilions focused on consumer or business hardware, China completely dominated the exhibits. There were quite a few large American companies and many American startups, mostly focused on software (though all their hardware was manufactured in Asia). America still dominates in software.
A few, mainly Chinese, companies were showcasing their humanoid robots. One robot was slowly but accurately moving and stacking boxes in a defined area. Others were roaming more freely and were good at avoiding objects. At this point, these robots have the IQ of a smart dog, an average cat (now cat lovers will love me), or Siri. I bet in a few years this will have changed.
I was only mildly surprised by how few European companies were at the show. It’s a very broad generalization, but Europe seems to be running on fumes of past glory. Western Europe has become a pro at regulation and mastered the redistribution of wealth (activities that don’t help innovation or economic growth), and not much else. Yes, there are exceptions, but that’s the point – they are exceptions. If Europe doesn’t change course, eventually it will run out of fumes.
The beauty of learning is that you don’t always know everything you’ve learned at the moment of learning. Often, you’re just depositing data points that will crystallize into insights at a much later date. I don’t know if CES will become an every-year tradition or something I do sporadically, but it’s definitely fertile ground for learning.
Marcinko Associates is a financial guide. We help answer your questions in an empowering way. We educate and empower medical colleagues to understand their financial picture and to make better financial decisions. We strive to simplify everything, clear up confusion, and address specific needs and goals.
Whatever your financial situation, we do not shame, criticize, or sell. We enrich, educate and empower. We work with medical colleagues at every stage of their financial journey, through big life personal changes to annual employment reviews, in order to help them understand, invest, and protect their money and autonomy.
And, like the famed ‘Tibetan Sherpas“, we guide physician entrepreneurs from medical practice business plan creation, funding, start-up operations and strategic management improvement to maximize profits and stream-line patient care quality initiatives.
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: MarcinkoAdvisors@outlook.com
Satisficing is a business decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met.
The term economic satisficing, a portmanteau of satisfy and suffice, was introduced by Herbert A. Simon in 1956, although the concept was first posited in his 1947 book Administrative Behavior. Simon used satisficing to explain the behavior of decision makers under circumstances in which an optimal solution cannot be determined. He maintained that many natural problems are characterized by computational intractability or a lack of information, both of which preclude the use of mathematical optimization procedures.
He observed in his Nobel Prize in Economics speech that “decision makers can satisfice either by finding optimum solutions for a simplified world, or by finding satisfactory solutions for a more realistic world. Neither approach, in general, dominates the other, and both have continued to co-exist in the world of management science”.
“Satisficing” – a made-up word created by combining satisfactory and sufficient – indicates something good, but not great. Like the Canadian single-payer health system, like Medicare-for-All.
Posted on February 21, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Dan Ariely PhD
THE IRRATIONAL ECONOMIST
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Of course you don’t need a human financial advisor … until you do. Today, we’ve had unfettered internet access to a wide range of investments, opinions and models for at least two decades. So, why the bravado to go it alone; fifteen positive years for equities, since 2009! Yet, the DJIA, S&P 500 and NASDAQ just plunged and plummeted today!
The financial advisor’s role is to remove the human element and emotion from investing decisions for something as personal as your wealth. Emotion drives the retail investor to sell low (fear) and buy high (greed). This is the reason why the average equity returns for retail investors is less than half of the S&P 500’s returns.
No, of course you don’t need a human financial advisor … until you do.
Understanding how economic behavior factors into health and health care decisions can benefit anyone interested in this field. However, the following groups of individuals may benefit most from the study of health economics:
Medical providers: Doctors, nurses, and assistants can evaluate new treatments, technologies, and services to determine ways to deliver value-based care. Medical providers benefit from understanding the economics behind these developments [MD/DO, DPM, DDS/DMD, RN, PA, etc].
Administrators: Health care administrators process insurance co-payments and manage financial metrics for health care providers. Learning the intricacies of health care economics can provide the necessary context as they liaise with insurance providers and use new technologies to process payments.
Policymakers or public health officials: Those who are in charge of policy decisions at the local, state, federal, or international levels benefit from understanding the economic relationship between stakeholders and the general public.
Business leaders: Because many Americans receive private insurance, health care becomes a major expense for employers. Business leaders must understand the health economics outlook to appease their employees, shareholders, and even their customers.
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: MarcinkoAdvisors@outlook.com
Posted on February 20, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
UPDATE
By PayPal and Staff Reporters
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NOTE: Information provided by PayPal is not intended to be and should not be construed as tax advice. For questions about your specific tax situation, please consult a tax professional.
Payment processors, including PayPal, are required to provide information to the US Internal Revenue Service (IRS) about customers who receive payments for the sale of goods and services above the reporting threshold in a calendar year.
Will I have to pay taxes when sending and receiving money on PayPal – what exactly is changing?
The Internal Revenue Service (IRS) announced transitional reporting requirements for payments received for goods and services. These requirements will lower the Form 1099-K reporting threshold over a 3-year period from the previous threshold of more than $20,000 in goods and services transactions and more than 200 goods and services transactions in a calendar year. We’ve summarized the IRS thresholds for Form 1099-K below.
Posted on February 20, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
BREAKING NEWS OF NEW DEADLINE
By Staff Reporters
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The Treasury Department has set a new deadline of March 21st 2025 for millions of businesses to fulfill a new reporting requirement on “beneficial ownership information,” after a court order allowed the federal agency to start enforcing the measure.
The Corporate Transparency Act, which Congress enacted in 2021, requires small businesses to disclose the identity of people who directly or indirectly own or control the company. The measure aims to prevent criminals from hiding illicit activity conducted through shell companies or opaque ownership structures, according to the Treasury.
Posted on February 19, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
SPONSOR: MarcinkoAssociates.com
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Capital Market: This is a market where buyers and sellers engage in the trade of financial assets, including stocks and bonds. Capital markets feature several participants, including:
Companies: Firms that sell stocks and bonds to investors
Institutional investors: Investors who purchase stocks and bonds on behalf of a large capital base
Mutual funds: A mutual fund is an institutional investor that manages the investments of thousands of individuals
Hedge funds: A hedge fund is another type of institutional investor, which controls risk through hedging—a process of buying one stock and then shorting a similar stock to make money from the difference in their relative performance
Posted on February 19, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
US stocks were mixed on Tuesday to begin a holiday-shortened week of trading, with potential policy moves by the Federal Reserve and President Donald Trump in focus.
The benchmark S&P 500 (^GSPC) rose nearly 0.2%, with most of the games coming in the final 10 minutes of trading, to hit a fresh record close of 6,129.58. Meanwhile, the Dow Jones Industrial Average (^DJI) and NASDAQ Composite (^IXIC) finished barely in the green.
Stocks on Wall Street were largely cautious after Monday’s closure for Presidents Day as investors debate the future path of interest rates. Fed officials over the long weekend signaled a firm belief that rates should stay at current levels to combat rising inflation.
Treasury yields stepped higher as investors sought more clues to the chances of rate cuts this year, given recent data failed to give a clear steer. The benchmark 10-year yield (^TNX) rose to trade around 4.54%.
Whether you know it, or not, inflation is your biggest financial and investing enemy. Fortunately, the rule of 70 will tell you in how many years the value of money will be halved.
For example, you just need to divide 70 with the rate of inflation. So if the rate of inflation is 7%, then 70/7 = 10 years. Therefore, in 10 years, your 100 note will be worth 50.
Note: The phrase rule of thumb refers to an approximate method for doing something, based on practical experience rather than theory. This usage of the phrase can be traced back to the 17th century and has been associated with various trades where quantities were measured by comparison to the width or length of a human adult thumb.
Posted on February 18, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
DEFINITION
By Staff Reporters
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Variable Universal Life Insurance: Permanent life insurance that allows the policyholder to vary the amount and timing of premiums and, by extension, the death benefit. Universal life insurance policies accumulate cash value which grows tax deferred. Within certain limits, policyholders can direct how this cash value will be allocated among sub-accounts offered within the policy.
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance.
Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
Posted on February 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
MSFT-HUG Update
By Dr. David Edward Marcinko; MBA MEd
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MSHUG: Microsoft Healthcare Users Group (MS-HUG) unified with the Healthcare Information and Management Systems Society (HIMSS) as part of the HIMSS Users Group Alliance Program in October 2003.
Today, the unification strengthens the commitment of HIMSS and MS-HUG to better serve their members and the industry through a shared strategic vision to provide leadership and healthcare information technology solutions that improve the delivery of patient care.
Posted on February 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
DEFINITIONS
By SBA and Staff Reporters
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Acquisition
The acquiring of supplies or services by the federal government with appropriated funds through purchase or lease.
Affiliates
Business concerns, organizations, or individuals that control each other or that are controlled by a third party. Control may include shared management or ownership; common use of facilities, equipment, and employees; or family interest.
Best and Final Offer
For negotiated procurements, a contractor’s final offer following the conclusion of discussions.
Certificate of Competency
A certificate issued by the Small Business Administration (SBA) stating that the holder is “responsible” (in terms of capability, competency, capacity, credit, integrity, perseverance, and tenacity) for the purpose of receiving and performing a specific government contract.
Certified 8(a) Firm
A firm owned and operated by socially and economically disadvantaged individuals and eligible to receive federal contracts under the Small Business Administration’s 8(a) Business Development Program.
Contract
A mutually binding legal relationship obligating the seller to furnish supplies or services (including construction) and the buyer to pay for them.
Contracting
Purchasing, renting, leasing, or otherwise obtaining supplies or services from nonfederal sources. Contracting includes the description of supplies and services required, the selection and solicitation of sources, the preparation and award of contracts, and all phases of contract administration. It does not include grants or cooperative agreements.
Contracting Officer
A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings.
Contractor Team Arrangement
An arrangement in which (a) two or more companies form a partnership or joint venture to act as potential prime contractor; or (b) an agreement by a potential prime contractor with one or more other companies to have them act as its subcontractors under a specified government contract or acquisition program.
Defense Acquisition Regulatory Council (DARC)
A group composed of representatives from each Military department, the Defense Logistics Agency, and the National Aeronautics and Space Administration and that is in charge of the Federal Acquisition Regulation (FAR) on a joint basis with the Civilian Agency Acquisition Council (CAAC).
Defense Contractor
Any person who enters into a contract with the United States for the production of material or for the performance of services for the national defense.
Electronic Data Interchange
Transmission of information between computers using highly standardized electronic versions of common business documents.
Emerging Small Business
A small business concern whose size is no greater than 50 percent of the numerical size standard applicable to the Standard Industrial Classification code assigned to a contracting opportunity.
Equity
An accounting term used to describe the net investment of owners or stockholders in a business. Under the accounting equation, equity also represents the result of assets less liabilities.
Fair and Reasonable Price
A price that is fair to both parties, considering the agreed-upon conditions, promised quality, and timeliness of contract performance. “Fair and reasonable” price is subject to statutory and regulatory limitations.
Federal Acquisition Regulation (FAR)
The body of regulations which is the primary source of authority governing the government procurement process. The FAR, which is published as Chapter 1 of Title 48 of the Code of Federal Regulations, is prepared, issued, and maintained under the joint auspices of the Secretary of Defense, the Administrator of General Services Administration, and the Administrator of the National Aeronautics and Space Administration. Actual responsibility for maintenance and revision of the FAR is vested jointly in the Defense Acquisition Regulatory Council (DARC) and the Civilian Agency Acquisition Council (CAAC).
Full and Open Competition
With respect to a contract action, “full and open” competition means that all responsible sources are permitted to compete.
Intermediary Organization
Organizations that play a fundamental role in encouraging, promoting, and facilitating business-to-business linkages and mentor-protégé partnerships. These can include both nonprofit and for-profit organizations: chambers of commerce; trade associations; local, civic, and community groups; state and local governments; academic institutions; and private corporations.
Joint Venture
In the SBA Mentor-Protégé Program, an agreement between a certified 8(a) firm and a mentor firm to perform a specific federal contract.
Mentor
A business, usually large, or other organization that has created a specialized program to advance strategic relationships with small businesses.
Negotiation
Contracting through the use of either competitive or other-than-competitive proposals and discussions. Any contract awarded without using sealed bidding procedures is a negotiated contract.
Partnering
A mutually beneficial business-to-business relationship based on trust and commitment and that enhances the capabilities of both parties.
Prime Contract
A contract awarded directly by the Federal government.
Protégé
A firm in a developmental stage that aspires to increasing its capabilities through a mutually beneficial business-to-business relationship.
Request for Proposal (RFP)
A document outlining a government agency’s requirements and the criteria for the evaluation of offers.
SCORE
Counselors to America’s Small Business is a 12,400-member volunteer association sponsored by the SBA. SCORE matches volunteer business-management counselors with present prospective small business owners in need of expert advice.
Small Business
A business smaller than a given size as measured by its employment, business receipts, or business assets.
Small Business Development Centers (SBDC)
SBDCs offer a broad spectrum of business information and guidance as well as assistance in preparing loan applications.
Small Business Innovative Research (SBIR) Contract
A type of contract designed to foster technological innovation by small businesses with 500 or fewer employees. The SBIR contract program provides for a three-phased approach to research and development projects: technological feasibility and concept development; the primary research effort; and the conversion of the technology to a commercial application.
Small Disadvantaged Business Concern
A small business concern that is at least 51 percent owned by one or more individuals who are both socially and economically disadvantaged. This can include a publicly owned business that has at least 51 percent of its stock unconditionally owned by one or more socially and economically disadvantaged individuals and whose management and daily business is controlled by one or more such individuals.
Standard Industrial Classification (SIC) Code
A code representing a category within the Standard Industrial Classification System administered by the Statistical Policy Division of the U.S. Office of Management and Budget. The system was established to classify all industries in the US economy. A two-digit code designates each major industry group, which is coupled with a second two-digit code representing subcategories.
Subcontract
A contract between a prime contractor and a subcontractor to furnish supplies or services for the performance of a prime contract or subcontract.
Posted on February 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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U.S. Stock Markets will be closed for Presidents Day. But crypto trading takes no days off.
The Presidents Day holiday was originally intended to celebrate the birthday of the first President George Washington on February 22nd, according to the Library of Congress. The holiday is still formally designated as Washington’s Birthday by the Office of Personnel Management. Washington’s birthday was an informal holiday during the country’s early existence and President Rutherford B. Hayes formalized the holiday in 1879, according to History.com. The holiday’s proximity to the birthday of President Abraham Lincoln on February 12th caused the general public to link the two and later expand the celebration to all presidents.
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Berkshire Hathaway, the investment conglomerate led by Warren Buffett, reduced its holdings in two US banks. Bank of America (BoA) and Citigroup shares were sold in the final quarter of 2024. The move, disclosed in a regulatory filing last Friday, comes as Buffett continues to trim Berkshire’s stock portfolio, favoring safer investments such as US Treasury bills.
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Wall Street just dumped nearly every dollar of the $12.5 billion in loans that helped Elon Musk buy Twitter—now called X—in 2022. A group of seven major banks, led by Morgan Stanley, offloaded $4.74 billion of the debt last Friday, selling more than their planned $3 billion as investors flooded in with $12 billion in orders, according to a report from the Financial Times.
In retirement, according to Josephine Nesbit, your economic class can be broadly categorized into four distinct groups, each defined by their net worth and financial capabilities, ranging from retirees with limited resources to the wealthy. And, according to Moneywise, here are the net worth categories of the poor, middle class (and upper-middle class) and rich:
Poor retirees: Poor retirees are in the lower 20th percentile, and may have a net worth of around $10,000. This is often without property ownership, forcing many to rely mainly on Social Security or minimal pensions.
Middle-class retirees: Making up the 50th percentile, with a median net worth of approximately $281,000, this group usually includes home equity, retirement savings and a 401(k) plan.
Upper-middle-class retirees: These retirees possess a net worth between $201,800 and $608,900. They have diversified assets and enjoy a comfortable retirement cushion.
Rich retirees: In the 90th percentile, with net worth starting at $1.9 million, this group has much more financial freedom and is able to afford luxuries and legacy planning.
Posted on February 15, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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What Is a Pig Butchering Scam?
Pig butchering scams get their colorful (and gory) name from the process of fattening hogs before slaughtering them. Except in this case, it’s a scammer making friends with you before taking your money. These cons have four distinct phases:
Initial contact is made by a scammer. The scammers are often enslaved by organized crime rings who force them to contact potential victims through social media platforms, dating apps, online networking sites, and job boards.
Fattening, a phase where the scammer gets to know and builds trust with a victim. They may pretend to be romantically interested in the victim, befriend the victim, or offer the victim a job.
Slaughter refers to the phase where the con pays off. Scammers may persuade victims to send them money, invest in a fake company or cryptocurrency, or reveal sensitive personal information that can be used for identity theft. Over time, scammers ask for large sums of money threatening to end contact if victims refuse to pay.
Shaming and disappearance. Scammers will continue their relationship with the victim until the victim is unable to pay or catches onto the scam. Scammers may taunt their victims to shame them into silence, or they may simply vanish along with any accounts, websites, or apps they’ve been using.
How to Avoid Pig Butchering Scams:
To avoid becoming a victim of a pig butchering type scam, watch for these red flags and know how to protect yourself:
Unexpected contact: Never respond to unsolicited messages from unknown contacts, even about seemingly benign topics, especially via text message and on encrypted messaging applications.
Refusal to participate in video chats: If someone you’ve been messaging with consistently declines to interact face-to-face, they likely aren’t the person from the profile photo.
Request for financial information: Don’t share any personal financial information with individuals you’ve never met in person. If a new virtual friend or romantic connection starts making financial inquiries, put the brakes on the relationship.
Invitation to invest in specific financial products: Be wary of any unsolicited investment advice or tips, particularly from someone you’ve only spoken to online and even if they suggest you trade through your own account. Always question what a source has to gain from sharing tips with you and whether the transaction fits with your financial goals and investment strategy.
Unknown or confusing investment opportunity: Carefully evaluate the product, as well as the person and/or company requesting your investment. Along with a basic search, try adding words like “scam” or “fraud” to see what results come up. Consider running recommendations by a third party or an investment professional who has no stake in the investment, and use FINRA BrokerCheck to see if the promoter is a registered investment professional.
Unfamiliar trading platforms: Do extensive research before moving any money, particularly in an emerging market like cryptocurrency, which has hundreds of exchanges and new avenues for trading continuing to evolve. Who controls the platform? What security measures are in place? How can you withdraw funds if needed? If you don’t know the answers to those questions, don’t put your assets there.
Exaggerated claims and elevated emotions: Take a closer look at any investment that offers much higher than average returns or is touted as “guaranteed.” Fraudsters will also often use their knowledge about you to appeal to your emotions—something like, “Don’t you want to have money to send your kids to college?”
Sense of urgency about an upcoming news announcement or share price increase: Remember that insider trading is illegal, and you should never trade in shares of a company on the basis of material, nonpublic information.
If you think you’ve been a victim of a pig butchering stock scam, submit a regulatory tip to FINRA. If you think you’ve been the victim of internet fraud, file a report with the FBI’s Internet Crime Complaint Center.
With international stock markets comprising about 40 percent of the world’s capitalization as of 2023, a broad range of investment opportunities exist outside the borders of the U.S.
For investors who are looking to diversify their mutual fund portfolio with exposure to companies located outside the U.S., there exist two basic choices: A global mutual fund or an international mutual fund.
By definition, international funds invest in non-U.S. markets, while global funds may invest in U.S. stocks alongside non-U.S. stocks.
Make a Choice: The definition may seem clear, but what may seem less clear is why an investor might select one over the other. The reason that an investor may select a global fund is to provide the portfolio manager with the latitude to move the fund’s investments among non-U.S. markets and the U.S. market in order to take advantage of the shifts in relative opportunities these markets may present at any given moment.
By investing in a global fund, the challenge for the investor is that he or she may not know at any point in time their total exposure to the U.S. market within the context of their overall portfolio.
An Inside Look: As a consequence, some investors want to manage their allocation risk by setting the broad asset allocation for their portfolio and then identifying funds that are within those asset classes. For these investors, an international fund may make more sense since it allows them to maintain a greater adherence to their desired domestic/international stock allocation.
Keep in mind that asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss. As you consider a global or an international fund, you should also be aware of the fund’s approach to the inherent currency risks. Some funds choose to engage in strategies that may mitigate the effects of currency fluctuations, while others consider currency movements – up and down – to be an element of portfolio performance.
Financial accounting and managerial accounting are two distinct branches of the accounting field, each serving different purposes and stakeholders. Financial accounting focuses on creating external reports that provide a snapshot of a company’s financial health for investors, regulators, and other outside parties. Managerial accounting, meanwhile, is an internal process aimed at aiding managers in making informed business decisions.
Objectives of Financial Accounting
Financial accounting is primarily concerned with the preparation and presentation of financial statements, which include the balance sheet, income statement, and cash flow statement. These documents are meticulously crafted to reflect the company’s financial performance over a specific period, providing insights into its profitability, liquidity, and solvency. The objective is to offer a clear, standardized view of the financial state of the company, ensuring that external entities have a reliable basis for evaluating the company’s economic activities.
The process of financial accounting also involves the meticulous recording of all financial transactions. This is achieved through the double-entry bookkeeping system, where each transaction is recorded in at least two accounts, ensuring that the accounting equation remains balanced. This systematic approach provides accuracy and accountability, which are paramount in financial reporting. CPA = Certified Public Accountant.
Objectives of Managerial Accounting
Managerial accounting is designed to meet the information needs of the individuals who manage organizations. Unlike financial accounting, which provides a historical record of an organization’s financial performance, managerial accounting focuses on future-oriented reports. These reports assist in planning, controlling, and decision-making processes that guide the day-to-day, short-term, and long-term operations.
At the heart of managerial accounting is budgeting. Budgets are detailed plans that quantify the economic resources required for various functions, such as production, sales, and financing. They serve as benchmarks against which actual performance can be measured and evaluated. This enables managers to identify variances, investigate their causes, and implement corrective actions. Another objective of managerial accounting is cost analysis. Managers use cost accounting methods to understand the expenses associated with each aspect of production and operation. By analyzing costs, they can determine the profitability of individual products or services, control expenditures, and optimize resource allocation.
Performance measurement is another key objective. Managerial accountants develop metrics and key performance indicators (KPIs) to assess the efficiency and effectiveness of various business processes. These performance metrics are crucial for setting goals, evaluating outcomes, and aligning individual and departmental objectives with the overall strategy of the organization. CMA = Certified Managerial Accountant
Reporting Standards in Financial Accounting
The bedrock of financial accounting is the adherence to established reporting standards, which ensure consistency, comparability, and transparency in financial statements. Globally, the International Financial Reporting Standards (IFRS) are widely adopted, setting the guidelines for how particular types of transactions and other events should be reported in financial statements. In the United States, the Financial Accounting Standards Board (FASB) issues the Generally Accepted Accounting Principles (GAAP), which serve a similar purpose. These standards are not static; they evolve in response to changing economic realities, stakeholder needs, and advances in business practices.
For instance, the shift towards more service-oriented economies and the rise of intangible assets have led to updates in revenue recognition and asset valuation guidelines. The convergence of IFRS and GAAP is an ongoing process aimed at creating a unified set of global standards that would benefit multinational corporations and investors by reducing the complexity and cost of complying with multiple accounting frameworks.
Posted on February 12, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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DEFINITION BAR SLIDES LEFT TO RIGHT
Understanding Insurance Jargon
1. Premiums
When you purchase an insurance policy, you'll be required to make regular payments, known as premiums. These payments are typically made monthly or annually and are the cost of maintaining your insurance coverage.
2. Deductible
Think of a deductible as the money you have to shell out from your own pocket before your insurance kicks in to help cover your expenses. It's like the upfront cost you need to cover before your insurance really starts working for you.For example, if you have a $500 deductible and make a claim for $1,000, you'll need to pay $500, and your insurer will cover the remaining $500.
3. Policyholder
The policyholder is the person who owns an insurance policy. This individual is responsible for paying premiums and making claims under the policy.
4. Coverage Limit
Every insurance policy has a coverage limit, which is the maximum amount your insurer will pay out for a covered claim. It's crucial to understand your policy's limits to ensure you have adequate coverage.
5. Underwriting
Underwriting is the process insurers use to assess the risk of providing coverage to an individual or entity. It involves evaluating factors such as age, health, and driving record to determine premium rates and eligibility.
Types of Insurance
6. Auto Insurance
Auto insurance provides financial protection in case of accidents, theft, or damage to your vehicle. It's a legal requirement in many places and typically includes liability, collision, and comprehensive coverage.
7. Health Insurance
Health insurance covers medical expenses, including doctor visits, hospital stays, and prescription medications. It can be provided by employers or purchased individually.
8. Homeowners Insurance
Homeowners insurance is like a safety net for your home and stuff. It steps in to help if your place or belongings get damaged or stolen. Plus, it's got your back with liability coverage in case someone gets hurt while on your property.
9. Life Insurance
Life insurance pays out a death benefit to beneficiaries when the policyholder passes away. It can provide financial security to loved ones and cover funeral expenses.
10. Liability Insurance
Liability insurance covers you in case you're responsible for injuring someone or damaging their property. It's often included in auto and homeowners insurance policies.
Navigating Insurance Policies
11. Exclusions
Exclusions are specific events or circumstances that your insurance policy doesn't cover. It's essential to review these carefully to understand what situations won't be reimbursed.
12. Riders
Riders are add-ons to insurance policies that provide additional coverage for specific situations. For example, you can add a rider to your homeowners policy to cover expensive jewelry.
13. Claim
A claim is a formal request to your insurance company for coverage or reimbursement for a loss or damage. It's essential to follow the claims process outlined in your policy.
14. Grace Period
The grace period is the amount of time you have to pay your premium after the due date without your coverage lapsing. Be aware of your policy's grace period to avoid a lapse in coverage.
15. No-Claims Discount
Many insurance companies offer a no-claims discount to policyholders who haven't filed any claims within a specified period. This can lead to lower premiums over time.
Specialized Insurance Terms
16. Subrogation
Subrogation is the process by which an insurance company seeks reimbursement from a third party for a claim it has already paid out. This often occurs in auto accidents when your insurer goes after the at-fault driver's insurance company.
17. Actuary
An actuary is a professional who uses mathematics and statistics to assess risk and set premium rates for insurance policies. They play a crucial role in the insurance industry's financial stability.
18. Adjuster
An insurance adjuster is responsible for investigating claims, evaluating damage, and determining how much the insurance company should pay. They work to ensure fair settlements for policyholders.
19. Premium Credit
Premium credit is a discount offered by insurers to policyholders who meet specific criteria, such as having a good driving record or installing safety features in their home.
20. Salvage Value
When an insured item is damaged or totaled, it may still have some value. Salvage value refers to the amount the insurer can recover by selling the damaged item.
Protecting Your Financial Future
21. Risk Management
Effective risk management involves identifying potential risks and taking steps to minimize or mitigate them. Insurance is one tool in your risk management toolkit.
22. Beneficiary
A beneficiary is the person or entity designated to receive the proceeds of a life insurance policy when the policyholder passes away. It's essential to keep this information up to date.
23. Policy Term
The policy term is the duration for which your insurance policy is valid. It's crucial to renew your policy before it expires to maintain coverage.
24. Umbrella Policy
An umbrella policy provides additional liability coverage beyond the limits of your primary insurance policies. It can protect your assets in the event of a costly lawsuit.
25. Coinsurance
Coinsurance is the percentage of costs that you and your insurance company share after you've met your deductible. It's often seen in health insurance policies.
Insurance in Practice
26. Premium Increase
Your insurance premium may increase due to factors such as claims history, changes in coverage, or external economic conditions. It's essential to shop around for the best rates.
27. Depreciation
Depreciation is the decrease in the value of an asset over time. Insurance policies may account for depreciation when settling claims for damaged property.
28. Reinstatement
If your insurance policy lapses due to non-payment, you may have the option to reinstate it by paying any outstanding premiums and fees.
29. Excess
Excess, also known as a deductible, is the portion of a claim that you're responsible for paying. It's designed to prevent small, frequent claims.
30. Pre-Existing Condition
In health insurance, a pre-existing condition is a medical condition you had before obtaining coverage. Within the framework of the Affordable Care Act, insurance providers are prohibited from refusing coverage or imposing elevated premiums due to pre-existing medical conditions.
Insurance Regulations
31. State Insurance Department
Each state in the United States has a department or commission responsible for regulating insurance within its borders. They oversee insurers' operations and protect consumers.
32. Consumer Reports
Consumer reports provide information on insurance companies' financial strength, customer satisfaction, and claims-handling. They can help you choose a reputable insurer.
33. Guaranteed Renewal
Guaranteed renewal is a provision in some insurance policies that ensures the insurer cannot refuse to renew your policy as long as you pay your premiums.
34. Non-Cancelable Policy
A non-cancelable policy is one that the insurer cannot cancel or change the terms of as long as you pay your premiums. This provides certainty in coverage.
35. Market Conduct Examination
Insurance regulators conduct market conduct examinations to assess insurers' business practices and ensure they comply with laws and regulations.
Insurance for Businesses
36. Business Interruption Insurance
Business interruption insurance provides coverage for lost income and expenses when a covered event, such as a fire or natural disaster, forces your business to close temporarily.
37. Workers’ Compensation
Workers' compensation insurance covers medical expenses and lost wages for employees who are injured on the job. It's typically required by law for businesses with employees.
38. Professional Liability Insurance
Professional liability insurance, often called errors and omissions insurance, protects professionals from liability claims resulting from errors or negligence in their work.
39. Business Owner’s Policy (BOP)
A business owner's policy bundles essential coverages, such as property and liability insurance, into a single policy designed for small businesses. It's a cost-effective option.
40. D&O Insurance
Directors and officers (D&O) insurance protects the personal assets of company leaders in case they are sued for alleged wrongful acts while managing the business.
Advanced Insurance Concepts
41. Aggregate Limit
The aggregate limit is the maximum amount an insurance policy will pay out during a policy term, regardless of the number of claims made.
42. Risk Pooling
Insurance works on the principle of risk pooling, where policyholders collectively share the financial burden of covered losses.
43. Loss Ratio
The loss ratio is a measure of an insurance company's claims payouts compared to its earned premiums. A high loss ratio may indicate financial instability.
44. Surplus Lines Insurance
Surplus lines insurance covers risks that standard insurers won't or can't cover. It's often used for unique or high-risk situations.
45. Rescission
Rescission is the cancellation of an insurance policy retroactively, often due to misrepresentation or fraud on the policyholder's part.
Future of Insurance
46. Insurtech
Insurtech refers to the use of technology, such as artificial intelligence and data analytics, to streamline and improve the insurance industry's processes.
47. Telematics
Telematics devices track driving behavior and can lead to personalized auto insurance rates based on individual habits.
48. Microinsurance
Microinsurance provides affordable coverage to low-income individuals and communities, helping them mitigate risks and protect their assets.
49. Blockchain in Insurance
Blockchain technology can enhance transparency and security in insurance by creating immutable records of policies and claims.
50. Climate Change and Insurance
Climate change poses significant challenges to the insurance industry as it leads to more frequent and severe weather events. Insurers must adapt to these changing risk landscapes.
Insurance is a complex field with a language of its own, but understanding these 50 common insurance terms can help you navigate the world of insurance with confidence. Whether you're looking for auto, health, home, or any other type of insurance, being informed about these terms and concepts is essential to making informed decisions about your coverage.
A new report from the Global Financial Literacy Excellence Center shows that the average American scored just 48% on a financial literacy test, with groups scoring as low as 37% in certain areas. Since the report’s inception in 2017, the results have been relatively stable: Americans have scored 48% to 52% correctly on the annual study.
But only 16% of Americans scored between 75% and 100% on the test in 2024. This alarming statistic has far-reaching consequences for companies, the wider economy, and more than half all Americans.
Posted on February 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Life Insurance: A contract under which an insurance company promises, in exchange for premiums, to pay a set benefit when the policyholder dies.
Several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance.
Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
Accounts payable are short-term obligations to be paid by an organization. It arises from trading activities and other business-related expenses during the business, including parties from whom we have purchased goods or services and costs incurred for which money is yet to be paid, generally in the same financial year.
#2 – Accounts Receivable
Accounts Receivable form part of current assets and refer to amounts due from parties to whom we have sold goods or services or incurred expenses on their behalf for which money is yet to be realized. It may include debtors, bills receivable, etc., which can be converted into cash in the short term to ensure the organization’s liquidity.
#3 – Balance Sheet
A Balance Sheet is a reconciliation of assets (current and fixed) and liabilities (current and noncurrent), and capital invested in an organization. Stakeholders such as creditors, shareholders, and banks, which have granted loans to the organization and government, use the Balance Sheet to analyze the financial position, growth, and stability.
#4 – Current Assets
Current assets refer to an organization’s realizable resources in the short term, generally during the same financial year. They include cash/bank balance and assets that can convert into cash, ranging from short-term loans and advances, sundry debtors, short-term investments, etc.
#5 – Equity
Equity is the amount invested in the business by its owners, in the form of capital in the case of sole proprietorship and partnerships, or shares (equity and preference) of varying denominations in companies (public or private).
#6 – Expenses
All the money outflow (present or future) incurred for procuring goods and services to affect sales in a business (direct expenses) and incidental to the business (indirect expenses) as well as ancillary to the running of an organization are referred to as expenses
#7 – Fixed Assets
Fixed assets are tangible resources that an organization uses for carrying out daily operations of a business, such as land, plant and equipment, furniture and fixtures, buildings, machinery, etc., which are not purchased to be sold in the short term.
#8 – Ledger
Ledger is the book of entry for recording transactions in such a way that we come to know the outstanding debit or credit balance of an account in our business for which we record the opening balance, transactions made in that account, and the closing balance to find out the exact position of that particular account.
#9 – Income Statement
The Income statement forms part of the financial statements and tells us the exact position of our gross and net profit at a particular cut-off date. It is done by recording all the direct incomes and closing stock on the credit side and all direct expenses and opening stock on the debit side to find the gross profit and all the indirect incomes and indirect expenses similarly to find out the net profit.
#10 – Liabilities
Liabilities are the present (short term) and future(long term) obligations of an organization which represents the debts due to be paid for goods and services procured for the business in the past and include sundry creditors, short term loans and advances, bills payable, etc. which come under short term liabilities and debentures, term loans from a bank, long term loans and advances, etc. which come under long term liabilities.
#11 – Net Income
The profit or loss arrived at after deducting all direct and indirect expenses from all the direct and indirect incomes equals to net income made by a business which is the earning done by the business at a cut-off date and is very useful in comparing the growth and financial position of an organization from previous years as well as for adopting measures for the betterment of the profitability levels of the business.
#12 – Revenue
The gross income earned by the organization from carrying out core business activities without deduction of any expenses is termed as revenue earned by the organization, which also indicates the sale and other incomes in total.
#13 – Credit
Wherever an account is credited, it reduces the balance of an account in the case of real accounts, creates an obligation to pay an individual in the case of personal accounts, and increases the income side if a nominal account is credited.
#14 – Debit
Wherever an account is debited, it increases the balance of an account in the case of real accounts, creating an obligation to receive money from an individual in the case of personal accounts and increasing the expenses side if a nominal account is debited.
#15 – Audit
An audit is an examination of books of accounts prepared by an organization to validate the entries recorded and ensure the accuracy and correctness of the financial statements along with finding out any discrepancies in the books, including frauds, if any, hidden by the employees of the organization.
Posted on February 9, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
ACADEMIC DEFINITIONS
By Staff Reporters
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What Is a PhD?
A PhD is a doctorate degree and is the highest postgraduate qualification awarded by universities. It involves undertaking original research in a narrow subject field and typically takes 4 years to complete.
A PhD in Business Administration provides an individual with a specialized and research-based background for a topic in the business management field. This is one of the key reasons it’s sought after by those who wish to work in business-related academia or research.
What Is a DBA?
A Doctor of Business Administration (DBA) is a business-orientated professional doctorate. Like a PhD, it is the highest-level postgraduate qualification which you can obtain from a university.
The degree program focuses on providing practical and innovative business management knowledge which can apply to any workplace. DBAs are designed for experienced practitioners such as senior managers, consultants and entrepreneurs who want to further their practical abilities.
This form of doctorate was first introduced as a way of allowing a distinction to be made between experienced practitioners and expert practitioners. The doctorate is an equal alternative to a traditional PhD and is an advanced follow-up for a Master’s in Business Administration (MBA).
Is a DBA and PhD Equivalent?
A Doctor of Business Administration (DBA) is equivalent to a Doctor of Philosophy (PhD); however, there are fundamental differences between these two doctoral degrees. These differences are nearly always at the center of DBA vs PhD discussions, and they stem from the intended career path of the student following their degree.
A PhD focuses on the ‘theory’ underpinning business management, whereas a DBA focuses on the ‘practical’ concepts. Those who complete a PhD in business management usually do so as they wish to pursue a career in research or academia. Those who complete a DBA do so as they want to pursue a more advanced role in the business industry or within their organization.
Posted on February 8, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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What is a Trilemma?
A trilemma refers to a situation in which three options are available, but only two can be chosen at a time. It is a situation in economics and international finance in which all three possible options are difficult or nearly impossible to achieve. Unlike a dilemma, which has two options, a trilemma has three options, all of which cannot be selected at once.
Trilemma in Economics
The impossible trinity is an example of a trilemma in economics. In an impossible trinity, a country can’t have a fixed exchange rate, independent monetary policy, and free capital movement all at once. A country can achieve only two out of the three policy objectives.
The impossible trinity involves a third option as a trilemma constraint, which cannot be achieved with the selected two options. It means that the selection of any two options will make it necessary to sacrifice the third beneficial option. It is like a three-way trade-off.
Posted on February 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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A vexing phenomenon is plaguing the labor market. “Ghost jobs” refer to listings by employers that either aren’t real or have already been filled but never lead to an actual hire. This is frustrating not only to job seekers but also to the Federal Reserve, which is trying to steer the economy to a stable place.
People should be aware of how to distinguish a ghost job posting from a real job posting so they can avoid the disappointment and anticipation of hearing back from a job that never existed.
The warning signs you applied for a ‘ghost job’:
Job opening was posted over 30 days ago
There is no time stamp on the original post
Re-posted role
A vague job description that doesn’t include salary or location
Posted on February 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Permanent Life Insurance: A class of life insurance policies that do not expire—as long as premiums are kept current—and which combine a death benefit with a savings component. This savings portion can accumulate a cash value against which the policy owner may be able to borrow funds.
Several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. So, you should consider determining whether you are insurable before implementing a strategy involving life insurance.
Finally, any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
Fund managers Tom Bailard, Larry Biehl and Ron Kaiser identified five types of investors, each type characterized by their investment preferences and actions. These 5 types are: Individualists, Adventurers, Celebrities, Guardians and Straight Arrows. Key to the different categories is their different attitude to seeking professional financial advice. Defined below:
Individualists have faith in their own investment abilities so do not approach a financial adviser. But they are also cautious.
Adventurers are what may be called high rollers, in that they like big bets, tend not to diversify and are happy to put all their eggs in one basket. They, too, are unlikely to seek financial advice.
Celebrities tend to follow the crowd in investment terms but are aware of their lack of expertise so frequently consult advisers.
Guardians are fearful of losing money, thus prefer rock-solid investments such as government bonds. They, too, are likely to seek professional investment advice.
Straight Arrows exhibit some of the characteristics of individualists and some of adventurers.
Posted on February 5, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Term Insurance: Life insurance that provides coverage for a specific period. If the policyholder dies during that time, his or her beneficiaries receive the benefit from the policy. If the policyholder outlives the term of the policy, it is no longer in effect. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased.
Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications.
And, you should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
A Sovereign Wealth Fund (SWF) is a large pool of capital managed by a country’s government to achieve specific economic and social goals. These funds are invested in various assets such as stocks, bonds, real estate, commodities, and other financial instruments.
SWFs are typically funded from the savings of state-owned enterprises, foreign currency reserves from central banks, or commodity exports. The size and composition of each SWF can vary significantly between countries based on their respective economic circumstances. Each country has various reasons for setting up an SWF. However, the most common purpose of establishing one is to diversify and protect a country’s economy. For instance, this fund can be used as emergency reserves for potential future global financial shocks.
Purpose of a Sovereign Wealth Fund
Sovereign wealth funds invest a country’s wealth to achieve the government’s economic and social objectives. These funds provide countries with an additional method to diversify their economies and reduce risk exposure. They also give governments a chance to invest in global markets outside their own countries, which can get them better returns on their investments. This increases the earning potential on foreign exchanges and provides additional economic stability.
Furthermore, SWFs are a valuable tool to help countries build up buffers and savings for future generations to be better prepared for future economic shocks. Proper use of SWFs leads to long-term economic growth and stability.
In addition to providing an alternative form of investment for governments and enterprises worldwide, SWFs have also been used to increase financial transparency and accountability in many countries. By making their investment decisions public, these funds help promote corporate governance standards across the globe. This encourages market stability and reduces risks associated with certain types of investments.
According to Rob Lenihan, of TheStreet, the January Barometer is a theory that says the investment performance of the S&P 500 in January is representative of the predicted performance of the entire year. The theory says that if stocks are higher in January, they should be higher for the year, and if they are lower in the first month, they’ll be lower for the year.
The S&P 500 finished down on January 31st, but the broad market ended up 2.6% for the month, so maybe we should heed the words of Wall Street legend Yale Hirsch, who first came up with the concept in 1972 in his Stock Trader’s Almanac, a widely read investment guide. Hirsch, by the way, also gave the world the Santa Claus Rally, which describes a rise in stock prices during the last five trading days in December and the first two trading days in the following January.
Analyst Stephen Guilfoyle said early this month in a post for TheStreet Pro that Santa Claus posted a loss this year, which was Santa’s second consecutive year in the red.
“No sweat,” the veteran trader said in his January 9th TheStreet Pro column. “That’s just a seasonal trade, and 2024 was a very nice year for U.S. equities in a broad sense.”
A certified financial planner (CFP®) helps individuals plan their financial futures. CFPs are not focused only on investments; they help their clients achieve specific long-term financial goals, such as saving for retirement, buying a house, or starting a college fund for their children.
To become a CFP®, a person must complete a course of study and then pass a two-part examination. The exam covers wealth management, tax palnning, insurance, retirement planning, estate planning, and other basic personal finance topics. These topics are all important for someone seeking to help clients achieve financial goals.
Chartered Financial Analyst (CFA)
A CFA, on the other hand, conducts investing in larger settings, normally for large investment firms on both the buy side and the sell side, mutual funds or hedge funds. CFAs can also provide internal financial analysis for corporations that are not in the investment industry. While a CFP® focuses on wealth management and planning for individual clients, a CFA focuses on wealth management for a corporation.
To become a CFA, a person must complete a rigorous course of study and pass three examinations over the course of two or more years. In addition, the candidate must adhere to a strict code of ethics and have four years of work experience in an investment decision-making setting.
Generative artificial intelligence (AI) is the utilization of algorithms to create content—such as text, code, imagery, videos, and even simulations—in mere seconds. The goal of AI in general is to mimic the intelligence of humans to perform tasks. “Generative” AI aims to learn from data without the assistance of humans. While today’s generative AI bots are not yet prepared for widespread utilization in patient care settings, AI is garnering significant interest in the healthcare industry as providers begin to test its capabilities in clinics and offices.
This article reviews the role that generative AI is beginning to play in the U.S. healthcare system, the potential of AI in healthcare, and concerns related to the technology.
Over the last few years, our portfolio has skewed more international, and this is the topic I want to address today. The US is a wonderful country and has many significant competitive advantages over the rest of the world. Despite all of its flaws, it has the most stable political system. It has great geography: It’s bordered by friendly neighbors to the north and south, and by mostly friendly oceans to the east and west. It has an abundance of natural resources. It is one of the largest democracies and has the right amount of capitalism (though we’ve been slipping in this department). We have the best capital markets, and the US is the best place in the world to start a new business, take risks and innovate. These factors led to the coronation of the US dollar as the world’s reserve currency.Ideally, in a perfect world, we’d want to have a portfolio of only US companies. Not because we are patriots, but because our life at IMA would be so much easier. Let me explain all the extra headaches we incur when we own foreign stocks. European markets open 7–8 hours earlier than ours; Japan is 16 hours ahead.
Thus, we have to place orders early in the morning, sometimes in the middle of the night. Our trading system, which links directly to US exchanges, allows us to buy or sell any US stock electronically, directly through our software. It is not linked to foreign exchanges, thus foreign trading comes with significantly more friction and consumes more time. Foreign stocks have multiple tickers, which constantly confuse our clients – this means we receive more inbound inquiries on them. US trading comes with zero commissions, allowing us to accumulate a position slowly, in tiny increments, with little effort. Brokers charge commissions on foreign stocks, so we have to be sensitive to how we are accumulating or disposing of a stock. I am sure I am missing half a dozen other headaches.
Yes, foreign stocks are a big headache for the IMA team. We are not a masochistic bunch, so let me explain why we go through this brain and time damage.Over the last decade the US has attracted the bulk of the capital flows, and the US stock market is trading at one of the highest valuations in US history. Historically, returns that followed such sky-high valuations have been mediocre at best. I wrote two books on this subject. How much you pay for a business, even if it is a great one, is important, as it is one of the key inputs determining your future returns. When we look for stocks, our searches are global. We look at the US and at foreign markets that have the rule of law. But our goal is to buy the stock that offers the highest risk-adjusted returns. For us to buy a foreign stock, it has to compensate us for the extra time and trouble involved – in other words it has to be a super-attractive investment.
Let me give you a few examples.
When we looked at defense companies, we examined all of them, in the US and internationally. We bought a few in the US but found that European defense companies were a more compelling proposition. First of all, Europe has been sipping Chianti, Bordeaux, Riesling, and Earl Grey for the last thirty years while collecting peace dividends and significantly underinvesting in defense. The US, to a large degree, became NATO.We have more enemies today than at any time in my lifetime, and they are stronger (China has a bigger manufacturing base than the US) and aligning with each other. There is an unthinkable war in Europe, where one country attacked another to steal its territory. China is contemplating invading Taiwan – a tiny island that produces the bulk of the world’s semiconductors. The Middle East is on fire. Rebels most of us didn’t even know existed are making the Red Sea unnavigable.
And from the European perspective, the US is becoming a fickle friend. Europe is racing to create a $500 billion defense fund, per the FT:Trump’s threat to withdraw US security guarantees from underspending Nato allies has spurred European capitals to explore more radical defense funding options, including joint borrowing that has traditionally been ruled out by fiscal hawks in Germany, the Netherlands and Denmark.
European defense spending is going up and will continue to go up, no matter who is in power and regardless of deficits. Thus, when we looked at defense companies, American counterparts were more expensive and had relatively shorter (though increasing) growth runways. We bought European defense stocks, and so far, it looks like we made the right bet.
On the surface, one of the main risks of buying foreign stocks is that we are making a bet against the US dollar. As you’ll see, this is a bit more nuanced than simply where stocks are listed.I don’t know where the dollar will be over the next five or ten years. Nobody does. Currencies are priced relative to one another. Thus, to forecast the US dollar versus the euro, I’d need two crystal balls – one for the US and another for the EU. I don’t have even one.There are a lot of policies the new administration wants to implement that may cause the dollar to appreciate. For instance, less regulation – if Musk succeeds – would be a huge positive for US economic growth. We need a lot more pragmatism in Washington, DC, something we’ve lost over the years.
But then, the US government embracing Bitcoin is probably one of the most idiotic policy ideas I’ve ever seen come from a politician (though there are contenders). It’s especially baffling when you consider that the only reason we’re not dealing with 20% mortgage rates and 30% car loans – despite our $36 trillion (and growing) debt – is that the US dollar remains the world’s reserve currency. The US dollar doesn’t have good contenders, and this is why the US government watering the seeds of one makes little sense to me. (I wrote about the problems with Bitcoin here).
Also, often foreign stocks are only foreign in name. This is where things get nuanced fast. Philip Morris International (PM) is listed on the NYSE but today gets most of its sales from outside the US. British American Tobacco (BTI), listed in London and also trading as an ADR (American depositary receipt) in the US – despite having “British” in its name – gets half of its sales from the US and half from the rest of the world. We own Swedish and Canadian oil companies. When it comes to oil companies, the location of their assets matter far more than where the companies themselves are listed. Most of the oil assets that these companies hold are in Canada. We chose these companies not only because they’re significantly undervalued and have strong balance sheets, but also because they’re led by exceptional management teams who excel at running the business and at capital allocation – an uncommon trait in the commodity space.
Also, oil is a global commodity, and while many factors affect its price, it’s also indirectly a bet on a weakening US dollar, since oil is priced in US dollars. We have to take this into account when constructing our portfolio.Then we have a UK company that makes components for the aerospace industry.
However, aerospace is a global industry, and over the longer term, the company’s stock performance will be tied entirely to what the aerospace industry as a whole is doing. Its performance will be indifferent to where it’s listed. We bought it at a fraction of the valuation of its American counterparts.We pay close attention to our concentration in a particular country, as well as to our exposure to specific currencies and industries. But as you can see, it’s a lot more nuanced and intricate than simply looking at where a company is traded. Our default choice it to buy American companies; but at the end of the day, our goal is to grow your wealth while keeping the volatility of your blood pressure low, so that you don’t have to worry about the markets. Today the average US stock is trading at a nosebleed valuation. High-quality, undervalued, well-managed foreign-listed stocks are where we’re finding opportunities to hopefully achieve this goal, even if it means more headaches for the IMA team. One more thought: In the late 1990s, value investors experienced both paradise and hell. As tech and dotcom stocks soared higher, there were many cheap stocks to choose from that were neglected by the inflating bubble. That was the paradise part – an abundance of undervalued companies to pick from while the crowd stampeded into the bubble. The hell, of course, was the pain of being left behind while the crowd uncorked champagne.Today, if you only invest in the US, you’re experiencing two hells. Your stocks are underperforming, and even inexpensive stocks are expensive.
Yes, welcome to double hell. European stocks, however, offer paradise today. True, Europe is not the place it used to be a few decades ago – which is precisely why nuance and stock picking are so important. Value stocks always look less exciting than the ones everyone is talking about.
I’d love to hear your thoughts, so please leave your comment and feedback here. Also, if you missed my previous article “Embracing Stock Market Stoicism”, you can read it and leave a comment here.
I’ve received emails from readers asking my thoughts on DeepSeek. I need to start with two warnings. First, the usual one: I’m a generalist value investor, not a technology specialist (last week I was analyzing a bank and an oil company), so my knowledge of AI models is superficial. Second, and more unusually, we don’t have all the facts yet.
But this story could represent a major step change in both AI and geopolitics. Here’s what we know: DeepSeek—a year-old startup in China that spun out of a hedge fund—has built a fully functioning large language model (LLM) that performs on par with the latest AI models. This part of the story has been verified by the industry: DeepSeek has been tested and compared to other top LLMs. I’ve personally been playing with DeepSeek over the last few days, and the results it spit out were very similar to those produced by ChatGPT and Perplexity—only faster.
This alone is impressive, especially considering that just six months ago, Eric Schmidt (former Google CEO, and certainly no generalist) suggested China was two to three years behind the U.S. in AI. But here’s the truly shocking—and unverified—part: DeepSeek claims they trained their model for only $5.6 million, while U.S. counterparts have reportedly spent hundreds of millions or even billions of dollars. That’s 20 to 200 times less.
The implications, if true, are stunning. Despite the U.S. government’s export controls on AI chips to China, DeepSeek allegedly trained its LLM on older-generation chips, using a small fraction of the computing power and electricity that its Western competitors have. While everyone assumed that AI’s future lay in faster, better chips—where the only real choice is Nvidia or Nvidia—this previously unknown company has achieved near parity with its American counterparts swimming in cash and datacenters full of the latest Nvidia chips. DeepSeek (allegedly) had huge compute constraints and thus had to use different logic, becoming more efficient with subpar hardware to achieve a similar result. In other words, this scrappy startup, in its quest to create a better AI “brain,” used brains where everyone else was focusing on brawn—it literally taught AI how to reason.
Enter the Hot Dog Contest
Americans love (junk) food and sports, so let me explain with a food-sport analogy. Nathan’s Famous International Hot Dog Eating Contest claims 1916 as its origin (though this might be partly legend). By the 1970s, when official records began, winning competitors averaged around 15 hot dogs. That gradually increased to about 25—until Takeru Kobayashi arrived from Japan in 2001 and shattered the paradigm by consuming 50 hot dogs, something widely deemed impossible. His secret wasn’t a prodigious appetite but rather his unique methodology; He separated hot dogs from buns and dunked the buns in water, completely reimagining the approach.
Then a few years later came Joey Chestnut, who built on Kobayashi’s innovation to push the record well beyond 70 hot dogs and up to 83. Once Kobayashi broke the paradigm, the perceived limits vanished, forcing everyone to rethink their methods. Joey Chestnut capitalized on it.
DeepSeek may be the Kobayashi of AI, propelling the whole industry into a “Joey Chestnut” era of innovation. If the claims about using older chips and spending drastically less are accurate, we might see AI companies pivot away from single-mindedly chasing bigger compute capacity and toward improved model design.
I never thought I’d be quoting Stoics to explain future GPU chip demand, but Epictetus said, “Happiness comes not from wanting more, but from wanting what you have.” Two millennia ago, he was certainly not talking about GPUs, but he may as well have been. ChatGPT, Perplexity, and Google’s Gemini will have to rethink their hunger for more compute and see if they can achieve more with wanting (using) what they have.
If they don’t, they’ll be eaten by hundreds of new startups, corporations, and likely governments entering the space. When you start spelling billions with an “M,” you dramatically lower the barriers to entry.
Until DeepSeek, AI was supposed to be in reach for only a few extremely well-funded companies, (the “Magnificent Ones”) armed with the latest Nvidia chips. DeepSeek may have broken that paradigm too.
The Nvidia Conundrum
The impact on Nvidia is unclear. On one hand, DeepSeek’s success could decrease demand for its chips and bring its margins back to earth, as companies realize that a brighter AI future might lie not in simply connecting more Nvidia processors but in making models run more efficiently. DeepSeek may have reduced the urgency to build more data centers and thus cut demand for Nvidia chips.
On the other hand (I’m being a two-armed economist here), lower barriers to entry will lead to more entrants and higher overall demand for GPUs. Also, DeepSeek claims that because its model is more efficient, the cost of inference (running the model) is a fraction of the cost of running ChatGPT and requires a lot less memory—potentially accelerating AI adoption and thus driving more demand for GPUs. So this could be good news for Nvidia, depending on how it shakes out.
My thinking on Nvidia hasn’t materially changed—it’s only a matter of time before Meta, Google, Tesla, Microsoft, and a slew of startups commoditize GPUs and drive down prices.
Likewise, more competition means LLMs themselves are likely to become commoditized—that’s what competition does—and ChatGPT’s valuation could be an obvious casualty.
Geopolitical Shockwaves
The geopolitical consequences are enormous. Export controls may have inadvertently spurred fresh innovation, and they might not be as effective going forward. The U.S. might not have the control of AI that many believed it did, and countries that don’t like us very much will have their own AI.
We’ve long comforted ourselves, after offshoring manufacturing to China, by saying that we’re the cradle of innovation—but AI could tip the scales in a direction that doesn’t favor us. Let me give you an example. In a recent
interview with the Wall Street Journal, OpenAI’s product chief revealed that various versions of ChatGPT were entered into programming competitions anonymously. Out of roughly 28 million programmers worldwide, these early models ranked in the top 2–3%. ChatGPT-o1 (the latest public release) placed among the top 1,000, and ChatGPT-o3 (due out in a few months) is in the top 175. That’s the top 0.000625%! If it were a composer, ChatGPT-o3 would be Mozart.
I’ve heard that a great developer is 10x more valuable than a good one—maybe even 100x more valuable than an average one. I’m aiming to be roughly right here. A 19-year-old in Bangalore or Iowa who discovered programming a few months ago can now code like Mozart using the latest ChatGPT. Imagine every young kid, after a few YouTube videos, coding at this level. The knowledge and experience gap is being flattened fast.
I am quite aware that I am drastically generalizing (I cannot stress this enough), and but the point stands: The journey from learning to code to becoming the “Mozart of programming” has shrunk from decades to months, and the pool of Mozarts has grown exponentially. If I owned software companies, I’d become a bit more nervous—the moat for many of them has been filled with AI.
Adapting, changing your mind, and holding ideas as theses to be validated or invalidated—not as part of your identity—are incredibly important in investing (and in life in general). They become even more crucial in an age of AI, as we find ourselves stepping into a sci-fi reality faster than we ever imagined. DeepSeek may be that catalyst, forcing investors and technologists alike to question long-held assumptions and reevaluate the competitive landscape in real time.
I’d love to hear your thoughts, so please leave your comment and feedback here. Also, if you missed my previous article “Escaping Stock Market Double Hell”, you can read it and leave a comment here.
Posted on January 28, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Capital is not flowing from developed countries to developing countries despite the fact that developing countries have lower levels of capital per worker, and therefore higher returns to capital.
Classical economic theory predicts that capital should flow from rich countries to poor countries, due to the effect of diminishing returns of capital. Poor countries have lower levels of capital per worker – which explains, in part, why they are poor. In poor countries, the scarcity of capital relative to labor should mean that the returns related to the infusion of capital are higher than in developed countries.
In response, savers in rich countries should look at poor countries as profitable places in which to invest. In reality, things do not seem to work that way. Surprisingly little capital flows from rich countries to poor countries.
This puzzle, famously discussed in a paper by Robert Lucas in 1990, is often referred to as the “Lucas Paradox”.
Posted on January 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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The S&P 500 (^GSPC) just capped its best first four trading days under a new president since Ronald Reagan’s first week in 1985. And, the week ahead will bring investors a deluge of news that will put that rally to the test.
Earnings from more than 100 members of the S&P 500 — highlighted by results from tech heavyweights Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) — are set for release, with Wednesday serving as the week’s busiest. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also set to report.
On this coming ednesday afternoon, the Federal Reserve will also announce its latest monetary policy decision, with the central bank expected to keep interest rates unchanged and investors focused on what Fed Chairman Jay Powell has to say about the balance of 2025.
Last week, the S&P 500, NASDAQ Composite (^IXIC), and Dow Jones Industrial Average (^DJI) each rallied during a holiday-shortened four day trading week. Over the last five days, the S&P 500 and Dow have gained more than 2.8%; the tech index is leading gains over that period, rising more than 3.1%.
The FTC’s second interim staff report on consolidated pharmacy benefit managers (PBMs) found that the three largest of these middlemen—CVS Health’s Caremark Rx, Cigna Group’s Express Scripts, and UnitedHealth Group’s OptumRx—”marked up two specialty generic cancer drugs by thousands of percent and then paid their affiliated pharmacies hundreds of millions of dollars of dispensing revenue in excess of estimated acquisition costs for each drug annually.”
People have been concerned about the future of Medicare for years. Now that Donald Trump has begun his second term in office, the question becomes: What will happen next?
According to the JAMA Network and ABC News, here are some predictions for what may come:
There will be greater price transparency: During his first term, Trump worked to make prices more transparent to both individuals and health care organizations. This may very well continue.
More emphasis on Medicare Advantage plans: Under Project 2025, it’s possible that Medicare Advantage plans will become the “default option for Medicare coverage.” This could lead to a privatization of the program.
Medicare’s future remains to be seen. For now, the best thing current and future retirees can do is keep an eye on their coverage options and costs.
MBA is the common abbreviation for a Master of Business Administration degree, and recipients typically stop attending school after receiving it.
However, those who are interested in conducting business research may decide to pursue a doctorate in business or management. Such students can earn a Ph.D. or a Doctor of Business Administration degree, commonly known as a DBA.
What ‘MSHA’ Stands For?
Master of Health Administration (MHA) and Master of Science in Health Administration (MSHA) are largely equivalent designations for degree programs that focus primarily on leadership and management of hospitals, healthcare organizations, and businesses that operate in the healthcare sector.
In contrast, an MBA in Health Administration is a Master of Business Administration degree program with a concentration, track, or specialization that provides students with several courses in topics specific to healthcare management and administration. Most of the coursework in an MBA program is devoted to general training in business functions, such as accounting, finance, logistics, marketing, personnel and project management.
MHA and MHSA programs devote all or most of their curriculum to studying the healthcare system, healthcare policy, and the application of business principles in the field of healthcare. MBA in Healthcare Administration programs devote only a portion of their curricula to topics specific to the healthcare sector.
While IAs and FAs may seem the same, they are not the same. The Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC) have clearly defined investment advisors as distinct from financial advisors.
The term financial advisor is a generic one that can encompass many different financial professionals, although it most commonly refers to stock brokers (individuals or companies that buy and sell securities).
Investment advisor, on the other hand, is a legal term and thus has a more clear-cut definition – or at least as clear as legalese is apt to be.
KEY DIFFERENCES:
Financial advisors help with all aspects of your finances, including saving, budgeting, insurance, retirement planning, and taxes.
Investment advisors focus specifically on choosing and managing investment portfolios.
Financial advisors offer broader financial guidance, while investment advisors concentrate solely on investments.
Investment advisors are held to the fiduciary standard, while financial advisors who work as brokers may operate under different rules.
U.S. Markets will be closed for Martin Luther King Jr. Day this Monday
The U.S. Markets will be closed on Monday, January 20th, 2025. Please be aware that, when making transactions after 4 p.m. EST on Friday, January 17th, 2025, you will receive the closing price as of Tuesday, January 21st 2025.
Martin Luther King Jr. Day is observed in the United States on the third Monday of January. This year coincides with the inauguration of President-elect Donald Trump.
Banks and government offices
Martin Luther King Jr. Day is a federal holiday, which means banks will be closed and government services as well, such as city offices, animal services, administrative offices of the police department, and administrative offices of fire department.
The U.S. Postal Service will not operate on Monday, along with other shipping services.
Posted on January 19, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
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