Annuities and their Associated Costs

Posted on September 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Another Look at Expenses

By Rick Kahler MS CFP™

Annuities are popular investments; almost every new physician or other client I see has one. Part of any investment adviser’s due diligence is to understand the history and intentions of the investments in a portfolio.

When I ask why someone purchased an annuity, the most common responses are: “We didn’t have to pay any fees or commissions.” “There are no ongoing expenses.” “All my money is working for me.” “The principal is guaranteed.”

Warning … Warning!

Any time you read or hear “no fees,” “no commissions,” “no expenses,” “free,” or “guaranteed” used in conjunction with an investment, it’s a red flag. All investments, including annuities, have costs associated with them. You need to ask some probing questions about those costs before proceeding.

Fixed Annuity Example

Let’s look at the costs for one popular type of annuity, the fixed annuity. This simply gives you a stated rate of return that often can change annually, similar to a bank certificate of deposit.

Suppose Investor A is sold a fixed annuity with a guaranteed return of 3.5%. Investor B invests her money in a plain vanilla portfolio of mutual funds holding 60% stocks and 40% bonds, which has a long-term projected return of 6%.

The insurance company selling the annuity must earn enough of a return on Investor A’s money to cover their expenses, pay commissions, and return something to Investor A. There is no magic formula on how that’s done. The insurance company invests the money in the same asset classes available to anyone. For the sake of this example, it’s reasonable to assume the insurance company would hold the same 60/40 portfolio as Investor B.

The annuity incurs internal costs for administration, managing the money, insuring the return of principal, and commissions paid to salespeople. While these vary somewhat from company to company, a cost of 2.5% isn’t unreasonable.

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If the company earns 6% and deducts 1% to recoup the upfront commission paid to the salesperson, 1.0% for management costs, and 0.5% for administrative fees, they pay out the remainder as a “fixed” return of 3.5%. Investor A only sees that 3.5% fixed return. If Investor A wants out of the policy before the cost of the up-front commission is fully recovered (usually 4 to 15 years), he will also incur a “surrender penalty” that is approximately equal to the remaining amount of commission paid to the broker selling the policy.

Investor B’s 60/40 portfolio will have the same 6% gross return as the insurance company’s portfolio. If Investor B purchases index funds from a company like Vanguard, her costs could be as low as 0.10%, leaving her a return of 5.9%.

Suppose Investors A and B each accumulates $1 million in retirement funds. The difference between Investor A’s guaranteed 3.5% return and Investor B’s average and unguaranteed 5.9% return is potentially an extra $2,000 a month in retirement income. Guarantees come with a cost.

Why Bother?

Given these numbers, you may wonder why anyone would purchase a fixed annuity? Why bother?

One reason is that many buyers don’t have the confidence that they can invest the money wisely or the stomach to watch the portfolio’s inevitable peaks and valleys.

Another reason is that most buyers don’t fully understand the costs.

Assessment

Unlike stocks, bonds, and mutual funds, most annuities are sold, not bought. I have never had a new client who independently purchased a no-load annuity. The annuities I typically see were sold by someone who received a commission. Commissions are not inherently bad, but in most cases they do inherently create a conflict of interest.

There are always fees associated with any investment. In my experience, the less transparent those fees are, the higher they are.

More:

Even More:

Conclusion

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Dictionary of Health Economics and Finance
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What is the “GINI” Statistical Diversion Index?

Posted on September 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

What it is – How it works?

[By Staff reporters]

The Gini Coefficient (also known as the Gini index or Gini ratio) is a measure of statistical dispersion intended to represent the income distribution of a nation’s residents, and is the most commonly used measure of inequality.

It is related to the Lorenz Curve and was developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper Variability and Mutability.

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MORE: About the Lorenz Curve

MORE: https://www.investopedia.com/terms/g/gini-index.asp

Assessment

Recently, the Gini Index has been in the Atlanta, Georgia news; and not in a good way. Learn why here?

ATLANTA: https://www.bloomberg.com/news/articles/2018-10-10/atlanta-takes-top-income-inequality-spot-among-american-cities

Conclusion

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About EngagewithGrace.org

Posted on September 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Contemplating End-of-Life Dignity

[By Staff Reporters]

SPONSOR: http://www.MarcinkoAssociates.com

According to the website, Engage with Grace, we make choices throughout our lives — where we want to live, what types of activities will fill our days, and with whom we spend our time, etc. These choices are often a balance between our desires and our means, but at the end of the day, they are decisions made with intent.

Somehow when we get close to death, however, we stop making decisions. We get frozen in our tracks and can’t talk about our preferences for end of life care.

Death Studies

Studies loom out there — 73% of Americans would prefer to die at home, but anywhere between 20-50% of Americans die in hospital settings. More than 80% of Californians say their loved ones “know exactly” or have a “good idea” of what their wishes would be if they were in a persistent coma, but only 50% say they’ve talked to them about their preferences.

But, end of life experience is about a lot more than statistics. It’s about all of us.

Genesis and Epiphany

In the summer of 2008, Matt Holt (Founder of Health2.0) and Alexandra Drane (President of Eliza) met with some friends for dinner. Over their second cocktail, they got deep into conversation about these very topics. Many of us live with such intent — why do we put the end of our lives in someone else’s control? Why isn’t this topic a conversation that people are having? How could we help start it? And it hit them — What if we could work together to start a viral movement — a movement focused on improving the end of life experience? What if we took responsibility for starting a national (even global) discussion that, until now, most of us haven’t had?

Engage With Grace

The One Slide Project was designed with one simple goal: to help get the conversation about end of life experience started. The idea is simple: Create a tool to help get people talking. One Slide, with just five questions on it. Five questions designed to help get us talking with each other, with our loved ones, about our preferences. And we’re asking people to share this One Slide — wherever and whenever they can… at a presentation, at dinner, at their book club. Just One Slide with five questions to help get all of us talking about death. Just One Slide that we as a community could collectively rally around sharing — in meetings, at a conference, or over a drink.

This is the link to the slide, and this is what we are asking you to do …

Download the One Slide — http://engagewithgrace.org/about/

Share it any time you can — at the end of presentations, at dinner, or at your book club. Think of the slide as currency and donate just two minutes whenever you can. Commit to being able to answer these five questions about end of life experience for yourself and for your loved ones. Then commit to helping others do the same. Get this conversation started.

Assessment

Let’s start a viral movement driven by the change we as individuals can affect …and the incredibly positive impact we could have collectively. Donate just two minutes to adding just this One Slide to the end of your presentations. Get others involved. Help ensure that all of us — and the people we care for — can end our lives in the same purposeful way we live them.

Just One Slide, just one goal. Think of the enormous difference we can make together.

Conclusion

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A Brief Look at Level Life Insurance Sales Commissions

Posted on September 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Of Interest to All Insurance Agents

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By Dr. David Edward Marcinko MBA MEd CMP™

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According to colleague David K. Luke MIM, MS-PFP, CMP™ the current structure of the life insurance industry regarding cash-value life insurance policies with most major insurance companies is to reward the selling agent with the entire commission upfront on a newly issued policy. The criticism to this practice is that this of course reduces the needed client-agent reviews and interaction and generates more “churning” and “flipping”. Unscrupulous agents are tempted to sell physician-clients another policy for another commission rather than encourage them to maintain and keep their existing policy, which most likely would have lower costs than any new policy considering the client was younger and most likely in better health with the existing contract. A model in which the insurance agent would have a financial incentive for their client’s continued patronage could create a win-win for both parties. We see this “pay as you” model currently operating successfully with wealth advisors and property/casualty agents, why not life insurance agents [personal communication]?

There are some flaws to this argument. The reality is that the captive life insurance industry and their agents prefer this form of lump compensation. The claim is that selling an individual a life insurance policy (the ultimate intangible product) is hard work, and likewise the 70% – 110% of the first year premium is fair compensation for the efforts. For existing agents to reduce their current income to a fraction of this commission upfront, but convert it into a trail over a multiyear period is actually quite distasteful. Therefore, this change will likewise not be initiated from the Insurance agent or insurance industry side unless other forces prevail.

The drive by the consumer to change this up front lump form of compensation has not yet presented itself in full force. After all, why does the consumer care about how the agent is paid if the consumer is satisfied with the end result? One must acknowledge that the drive to reduce commissions and up front loads in the investment advisory business was driven by the consumer that insisted on lower fees and costs.

However, the relevant costs of a life insurance policy are not quite as obvious. Only by comparing a quote from different companies can a consumer compare costs, and even then it is unknown and not understood how the pricing mechanisms used by the insurance company work. The advent of non-agent sold policies however is decreasing the cost of life insurance (there is no big commission check written to the selling agent) and is hitting the radar of consumers. The consumer can notice this difference if the consumer compares the proposed agent sold policy premium with one sold directly by a financial institution such as USAA or AARP. These companies have a work force of sales people that are compensated primarily on salary. Likewise the company can structure more competitive pricing, and in effect offers a levelized cost (in place of commission) insurance product.

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For example, Mark Maurer CFP® of Low Load Insurance Services believes that a levelized compensation basis will not occur unless all the insurance companies were to go to such a plan all at once. If an agent can “pick and choose” he/she may use a “levelized compensation” policy when in a competitive situation, as such a policy should in theory make a policy more inexpensive. An agent would then use the higher “front-end” policy when there is a large up-front premium or in a scenario with limited competition. Mark believes the answer to the whole argument is full disclosure. Both agents and home offices would not want the purchaser to know that 100% or more of their premium is going to sales costs and then products would then get better [personal communication].

The insurance industry has a powerful lobby in Washington. Only market pressure will cause a change in this decades old insurance industry practice that has made many life insurance policies expensive and inefficient. Pricing from non-agent sold life insurance companies will be the impetus that drives the old-line Insurance companies to restructure their commissions to agents.

Insurance agents also remember the days of 8% load mutual fund commissions and minimum $60 dollar commissions on stock trades in the late 1980’s! That is an inflation equivalent of more than $130 per trade, minimum commission, today. The current investing world would laugh at these costs [charges] today. When the physician-consumer realizes, through full disclosure and outside competitive market pressures, that life insurance protection can be more affordable from other non-traditional channels, then s/he will insist on a better, more affordable product.

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Ultimately, the big agent driven life insurance companies will have to change their commission structure. The transition is currently in process. Only time will tell now [personal communication].

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HEALTH CARE: Cyber Attack Costs

Posted on September 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Cyberattacks are causing issues across all sorts of industries, from Microsoft to AT&T to Ascension. But it looks like the healthcare industry is getting hit the hardest—financially, at least.

The 2024 Cost of a Data Breach Report from IBM and think tank Ponemon Institute found that the global average cost of a data breach rose 10% between March 2023 and February 2024, reaching a total average cost of $4.88 million in that period. Costs for disruptions to business processes and post-breach customer support and remediation were the largest drivers behind the increase.

However, of the 17 industries studied, healthcare had the most expensive data breaches, with an average cost of $9.77 million during that same period. In fact, healthcare has held the No. 1 spot for costliest breaches since 2011, according to the study.

For comparison, the next highest average cost was in finance, at $6.08 million.

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DAILY UPDATE: TeleHealth, Hospitals & Native Americans as the Markets Continue Down Slide

Posted on September 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Telehealth has become all the rage following the Covid-19 pandemic, with about 17% of appointments going virtual, up from 1% in February 2020.

Stat: 350. That’s about how many small and rural US hospitals—out of roughly 1,800—are using free and cheap cybersecurity resources the White House rolled out this summer. (Nextgov/FCW)

Quote: “We’re being blinded.”—Meghan Curry O’Connell, chief public health officer for the Great Plains Tribal Leaders’ Health Board, on the reported lack of access Native American tribal epidemiology centers have to federal government health data (KFF Health News)

Read: Race is used in clinical algorithms that determine patient diagnoses and care for everything from kidney transplants to lung function. A growing number of health professionals argue it shouldn’t be. (Stat)

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

What’s up

DocuSign rose 3.97% after it beat earnings expectations and hailed the rollout of its new AI offerings as a success.
Bowlero climbed 6.68% after announcing impressive revenue growth and a positive fourth-quarter forecast.
Guidewire Software gained 12.36% thanks to a strong quarter for the insurance software provider.
Big Lots soared 8.73% after it faked out the market and delayed the announcement of its latest quarterly earnings for another week. Management is probably trying to find some loose change between the couch cushions to stave off bankruptcy.

What’s down

Broadcom sank 10.36% after beating earnings but failing to impress investors with revenue guidance for next quarter.
Tesla gave up some of its recent gains, falling 8.45% as investors begin to realize that online hype doesn’t translate into profits (usually).
Super Micro Computer just can’t catch a break, and fell another 6.79% after a JP Morgan analyst downgraded the stock due to the sense of uncertainty hanging around it.
UIPath shed 6.04% even though the AI software provider beat top and bottom line expectations, forecast solid growth ahead, and increased its share buyback program.
Semiconductor stocks sank as a group, pulled lower by fears of slowing growth. ASML Holding dropped 5.38%, Marvell Technology slid 5.28%, and KLA Corporation stumbled 3.47%.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX)dropped 95points (–1.73%) to 5,408.42, down 4.3% for the week; the Dow Jones Industrial Average^® ($DJI) fell 410.34 points (–1.01%) to 40,345.41, down 2.9% on the week; NASDAQ Composite^® ($COMP)declined 436.82 points (–2.55%) to 16,690.83, down 5.8% for the week.
The 10-year Treasury note yield (TNX) fell two basis points to 3.71%and was down 20 basis points for the week, but now, it has a six-basis point premium to the 2-year Treasury note yield, which fell 28 basis points this week.
The CBOE Volatility Index^® (VIX) hopped to 22.21 after hitting 23.76 intraday, the highest since August 8.

CITE: https://tinyurl.com/tj8smmes

Trump Media has lost 75% of its market value since the company went public in March, costing Trump himself billions in net worth.

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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DAILY UPDATE: Nvidia DOJ and Nippon Steel as Stocks Sill Slide

Posted on September 6, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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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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A bad day for Nvidia got even worse on Tuesday when Bloomberg reported that the Department of Justice subpoenaed the chipmaker as part of its investigation into whether the world’s hottest company unfairly wields its industry dominance. Yesterday, Nvidia denied it was technically subpoenaed. Bloomberg followed up to say that Nvidia was merely splitting hairs about the type of request it received from the DOJ but that it was in fact asked to answer questions about its empire.

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

What’s up

Nio—the Chinese EV maker, not the Keanu Reeves character—soared 14.52% after reporting record deliveries last quarter and forecasting a stronger quarter ahead.
US Steel continued its roller coaster ride today, rising 1.97% on the rumor that President Biden will block its acquisition by Japan’s Nippon Steel.
JetBlue Airways ascended 7.16% after the company boosted its revenue guidance for the coming quarter.
G-III Apparel Group rocketed 22% thanks to a shockingly impressive quarter for the fancy apparel maker.
Shoe Carnival, which sells shoes and isn’t in fact a poorly scripted horror film, popped 8.20% thanks to a back-to-school shopping boom.

What’s down

C3.ai, which sounds like the name of a new Star Wars droid, sank 8.21% after the enterprise software company announced that subscription revenue fell short of expectations last quarter.
Hewlett Packard Enterprise staggered 6.02% after posting record AI revenue but paying the price for it.
Copart dropped 6.67% once the online car auctioneer reported solid revenue growth but missed earnings expectations last quarter.
ChargePoint plummeted 17.75% thanks to an absolutely terrible quarter for the EV charging network company.
Toro Company, makers of your dad’s favorite lawnmower, fell 10.09%. Sales to residential customers rose last quarter, but sales to professionals, who buy more expensive equipment, fell.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The SPX fell 16.66 points (–0.30%) to 5,503.41; the Dow Jones Industrial Average^® ($DJI) dropped 219.22 points (–0.54%) to 40,755.75; the NASDAQ Composite^® ($COMP) added 43.36 points (0.25%) to 17,127.66.
The 10-year Treasury note yield (TNX)slid to 3.73%, its lowest close since August 5 following today’s jobs-related data.
The CBOE Volatility Index^® (VIX)fell to just above 20, near its historic average.

CITE: https://tinyurl.com/tj8smmes

The president is gearing up to block Japan’s Nippon Steel from acquiring US Steel, according to the Washington Post—a move that could end the highly politicized deal.

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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What are FRACTIONAL STOCK SHARES?

Posted on September 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Information that Physician Investors Should Know?

By Staff Reporters

DEFINITION: Fractional shares are partial shares of a company’s stock. Instead of owning one or more full shares of the stock, you own a portion, or fraction, of one. In the past, investors generally would end up with fractional shares only after a stock split, since brokers allowed the purchase of full shares only.

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

A fractional share is a portion of an equity stock that is less than one full share.
Fractional shares often result from stock splits, which don’t always result in an even number of shares.
Mergers or acquisitions create fractional shares, as companies combine new common stock using a predetermined ratio.
Fractional shares can make it easy to buy very small stakes in many different companies. But, if your brokerage charges commissions, you might wind up paying a lot of fees due to the temptation to invest in many different companies.

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Stock too Pricey? Try Partial Shares. - WSJ

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READ: https://www.mybanktracker.com/blog/investing/fractional-shares-310822

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Filed under: "Ask-an-Advisor", Glossary Terms, Investing | Tagged: fractional shares, fractional stock shares, Investing, partial company shares, partial shares | Leave a comment »

LEASING: The “Money Factor Lie”

Posted on September 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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An increasingly common leasing scam is the money factor lie

The “money factor” in leasing is the financing cost of a monthly lease payment and is similar to an interest rate – and it’s important to know the difference. The money factor is a small decimal and should be shown as such, whereas the interest rate is a percentage. A deceitful sales person will count on you not knowing the difference.

For example, a interest rate of 2.5% is not the same as a factor of .0025 and when the latter is used to calculate your lease payment, he or she ends up overcharging you. As a result, you have to pay much more over the lease term without realizing it.

Cite: https://www.r2library.com

To calculate the money factor, use this formula: Money Factor = Lease Charge / (Capitalized Cost * Residual Value) * Lease Term. It’s important to note that the customer’s credit score determines the money factor. The higher your credit score is, the lower the money factor on the lease will be.

One way to calculate the money factor is by converting it to an APR. To do this, you multiply the money factor by 2,400. If a car dealer provides you with an interest rate, divide it by 2,400 to find the money factor.

In another example, if you are quoted a money factor of .003 on a loan, that would be (2,400x.003) 7.2%. If the car dealer quotes you an interest rate of 4.2%, you can divide it by 2,400 to find the money factor of .00175.

The money factor may be shown in an easier-to-read format, like 1.75 instead of .00175. This can often confuse customers because it appears to be a low interest rate. But don’t be fooled by a money factor presented as a factor of 1,000. Always be sure to ask if the number you are given is the APR or the money factor. If it’s the money factor, convert it to APR so that you can clearly see the interest rate.

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Filed under: "Ask-an-Advisor", Accounting, Funding Basics, Glossary Terms | Tagged: annual percentage rate, APR, interest rate, money factor, money factor lie | Leave a comment »

Who Does a Stock Broker Work for – Really?

Posted on September 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

And … What’s Up at the Bank of America?

http://www.CertifiedMedicalPlanner.org

A Vintage ME-P

According to E. Dilts, BoA is making it harder for brokers to take some of their clients with them when they leave Merrill Lynch-specifically, clients that were referred to the broker by a Bank of America branch.

Brokers in recent months have been asked to sign contracts saying that if they leave Merrill Lynch, they can’t take the names or phone numbers of those customers with them, because those clients belong to the bank.

Lawyers said this policy chips away at the decade-old truce among brokerages known as the Protocol for Broker Recruiting.

The agreement was meant to end the continual and costly legal battles between brokerages and their brokers over who had the right to keep clients, and allows departing brokers to take client information including names and phone numbers with them.

***

Stock Broker versus Brokerage House

***

Assessment

So, who does the broker [er-ah! financial advisor] really work for – the [physician] client or the brokerage house? And doesn’t this make your account just a portion of their “book of business?”

Talk about advice versus product sales?

Link: http://wealthmanagement.com/wirehouse/bank-america-chips-away-brokerage-industry-truce?NL=WM-27&Issue=WM-27_20150224_WM-27_400&sfvc4enews=42&cl=article_2&YM_RID=CPG09000002702210&YM_MID=2033

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Channel Surfing the ME-P

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Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

* 8

Filed under: "Ask-an-Advisor", Ethics, Experts Invited, Investing, Risk Management | Tagged: Bank of America, E. Dilts, Merrill Lynch, Protocol for Broker Recruiting, stock brokers | 1 Comment »

Understanding Traditional “Full-Service” Stock Brokers

Posted on September 4, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Fundamentals of Physician Investing

By Daniel B. Moisand CFP®, and ME-P staff

It used to be that the only way to get investments and investment information was through paying commissions to a traditional broker. Then in the 70’s (specifically, May, 1975) the brokerage industry went through significant deregulation allowing for the discounting of commissions. Charles Schwab and Company, among others, was able to eliminate the advice component and offer trades at dramatically reduced rates. The full service brokerage business responded by emphasizing the scope of their services namely research and advice in order to compete. The demand for both has continued to grow, even though research information is now readily available through many sources. These brokerage firms continue to thrive despite their poor performance in analyzing tech stocks and the Enron and Global Grossing debacles. More recent debacles in 2008-09, the flash crash a decade ago and more recent developments are legion, as well.

Fundamental Flaws

The fundamental flaw with these firms is the array of conflicts of interest between the firm and its customers. While the incentive to trade has been well chronicled as a conflict, these firms have not let consumer’s demand for a better-aligned compensation arrangement go unnoticed. Fee-based account relationships have proliferated accordingly. In theory, this type of arrangement, usually a percentage of assets, gives an incentive for performance and service rather than trade activity. This certainly has merit. However, conflicts remain that should be considered.

Pay to Play

The practice of paying brokers, higher levels of compensation for in-house products was commonplace. Today, explicitly higher payouts still exist but are less common. Instead, many firms use the sale of proprietary mutual funds and other products as part of management’s compensation. Other forms of non-monetary compensation such as a better office can be used as incentive for the brokers. The greater profitability of these in-house offerings will keep this conflict around for some time.

Subtle Conflicts of Interest

Less obvious is the conflict between the investment banking arm, the research department, and the retail brokerage operations of a firm. Even firms with no proprietary funds to sell may grapple with this issue. Here, research is pressured to say favorable things about a particular company’s stock by the investment bankers in hopes of obtaining more of that company’s business. When a firm brings a company public odds are great that a “strong buy” rating will come with the IPO. Of course, the lesson remains – consider the source.

Assessment

Traditional brokers have a somewhat higher standard of accountability than the on-line firms as to their accountability. If you buy the stock of a company that goes bankrupt through an on-line broker you have little recourse. After all, that was your choice. If a full-service broker recommended the stock to you, that broker will have to defend the recommendation.

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

***

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SEPTEMBER: Stock Market Effect?

Posted on September 4, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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***

Yesterday was only the first trading day of what’s traditionally Wall Street’s weakest month of the year, and September’s already living up to its reputation.

U.S. stocks tumbled Tuesday to their worst day since an early August sell-off, as a week full of updates on the economy got off to a discouragingly weak start. The S&P 500 sank 2.1% to give back a chunk of the gains from a three-week winning streak that had carried it to the cusp of its all-time high. The Dow Jones Industrial Average dropped 626 points, or 1.5%, from its own record set on Friday before Monday’s Labor Day holiday. The NASDAQ composite fell 3.3% as Nvidia and other Big Tech stocks led the way lower.

Understanding the September Effect

From 1928 through 2023, the S&P 500 index has averaged a decline during the month of September.

Stock Trader’s Almanac. “September Almanac: Worst Month of the Year since 1950.” This is, however, an average observed over many nearly a century, and September is certainly not the worst month of stock-market trading every year. In fact, for some years September has been among the best-performing months. Moreover, while the average return for September is negative, the median return for that month has turned positive.

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

While the September Effect might present a market anomaly in the sense that it violates the assumption of market efficiency, the effect is not overwhelming and, more importantly, is not predictive in any useful sense. This is because the time period under consideration will matter a great deal.

For instance, if an individual had bet against September over the last 100 years, that individual would have made an overall profit. If the investor had made that bet only since 2014, though, that investor would have lost money.

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Filed under: "Ask-an-Advisor", Glossary Terms, Monthly Reports | Tagged: DJIA, DOW, NASDAQ, S&P 500, September Effect | Leave a comment »

CURRENCY PAIRS: Investing Ratio Definition

Posted on September 3, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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***

A currency pair is the quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market. The currency that is used as the reference is called the counter currency, quote currency, or currency and the currency that is quoted in relation is called the base currency or transaction currency.

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

Currency pairs are generally written by concatenating the ISO currency codes (ISO 4217) of the base currency and the counter currency, and then separating the two codes with a slash. Alternatively the slash may be omitted, or replaced by either a dot or a dash. A widely traded currency pair is the relation of the euro against the US dollar, designated as EUR/USD. The quotation EUR/USD 1.2500 means that one euro is exchanged for 1.2500 US dollars. Here, EUR is the base currency and USD is the quote currency (counter currency). This means that 1 Euro can be exchangeable to 1.25 US Dollars.

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Filed under: "Ask-an-Advisor", Financial Planning, Investing, Risk Management | Tagged: base currency, counter currency, currency pair, quote currency, wikipedia | Leave a comment »

LABOR DAY: Year 2024

Posted on September 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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***

The first Labor Day holiday was celebrated on Sept. 5th, 1882, in New York City, in accordance with the plans of the Central Labor Union. President Grover Cleveland signed a law on June 28th, 1894, that made the first Monday in September of each year a national holiday, according to the Department of Labor.

***

The financial markets will be closed today Monday, September 2nd, for Labor Day, 2024. Most brokerages will process transaction requests received after 4 p.m., Eastern time, on Friday as if received before 4 p.m., Eastern time, on Tuesday, September 3rd, 2024.

***

The stock market has had a strong 2024 so far, but that doesn’t mean investors won’t enjoy the long weekend. The Dow Jones Industrial Average has gained 11% this year, while the S&P 500 has climbed 15% and the NASDAQ Composite has moved 21% higher. A handful of tech stocks, such as Nvidia (ticker: NVDA) and Meta Platforms (META), have led the charge as traders bet on the future of artificial intelligence.

***

ORDER: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

***

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Filed under: "Ask-an-Advisor", Investing, LifeStyle | Tagged: Central Labor Union, Department Labor, DJIA, DOL, DOW, FB, Grover Clevelad, Labor Day, Labor Day 2023, markets, Meta, NASDAQ, Nvidia, S&P 500, stock markets | Leave a comment »

RETIREMENT: America’s Millionaires

Posted on September 1, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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***

It seems many of America’s millionaires are saving for retirement. Thanks largely to a stock market, the number of 401(k) millionaires hit a new record last quarter—rising 2.5% to 497,000, as per Fidelity. It was the third quarter in a row of growth for retirement savings, Quartz reports, and the average amount in retirement accounts hit $127,100.

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

But even those who have made it to the $1 million mark haven’t quite hit the figure most Americans think they need to retire comfortably. That’d be $1.46 million, according to the latest survey by Northwestern Mutual.

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Filed under: "Ask-an-Advisor", Accounting, Career Development, Events-Planner, Financial Planning, Funding Basics, Health Economics | Tagged: Fidelity, james altucher, millionaire mindset, Millionaires, Northwestern Mutual, Quartz | Leave a comment »

ChatGPT: Considers Changing Corporate Structure

Posted on September 1, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

***

***

The Financial Times reports that the ChatGPT-maker is discussing changing its corporate structure, which currently has it governed by a nonprofit entity, to make it more attractive to investors as the company works to complete a funding round that values it at $100 billion.

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

Apple, Nvidia, and Microsoft (which is already a big OpenAI backer) are said to be considering participating in the investment round.

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Filed under: "Ask-an-Advisor", Alternative Investments, Financial Planning, Funding Basics, Investing, Marcinko Associates | Tagged: AI, Apple, artificial intelligence, ChatGPT, Marcinko, MSFT, non-profot, Nvidia, openAI | Leave a comment »

STOCK MARKETS: Summer Ends at Record High

Posted on September 1, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

Sponsored By: http://www.MarcinkoAssociates.com

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***

Stock Markets celebrated Labor Day 2024 and the end of summer with the Dow Jones Industrial Average closing at another record high and the S&P 500 clinching its fourth straight winning month. The Fed’s favorite inflation gauge came in as expected, providing yet another sign pointing to a September interest rate cut.

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

And Intel rose on reports that the beleaguered micro chip maker is considering various options, including breaking up the business, to overcome its slump.

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Filed under: "Ask-an-Advisor", Financial Planning, Investing | Tagged: DJIA, DOW, fed, FOMC, Intel, interest rates, IR, IRS, Labor Day, S&P 500 | Leave a comment »

DOCTOR: What’s Your Net Worth?

Posted on August 31, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

How Would You Respond … if Asked?

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

Financial professionals like me think nothing of asking clients this question.

But, if the tables were turned, though, and clients or prospective clients asked the same question of us, how would we respond?

The “Talk”

Every now and then this issue comes up in conversations among financial planners. Some advisors think their net worth is none of their clients’ business, any more than doctors’ cholesterol levels are any business of their patients.

Others are concerned that a single number like net worth is incomplete information and can even be misleading. Knowing a financial professional has a net worth of, say, five million dollars doesn’t necessarily mean the person is trustworthy or a capable financial planner. Net worth tells prospective clients nothing about where the money came from. The planner may have inherited it, won the lottery, earned it through a business other than financial planning, earned it from commissions on poor investments, or even obtained it illegally.

Wither the “Number”

Nor does net worth reveal anything useful about the understanding of money or knowledge of financial planning. I’ve worked with plenty of multi-millionaires who were skilled at making money but were horrible money managers and inept at investing. Even more, there are many brilliant young planners who haven’t had the time to accumulate a large net worth.

I suspect that most clients who want to know about their planners’ net worth actually have several deeper questions in mind. Some may be asking if the professional actually follows his or her own advice. Imagine how troubling it might be to find out your financial planner doesn’t have a retirement plan, is a habitual over-spender, or hasn’t gotten around to making a will.

Other Reasons Why

Another reason for the question may be a concern whether the planner is financially stable and will be around in the future. During the Great Recession, many financial professionals saw their revenues fall by 30% to 40%. Some who did not have a business emergency reserve had to resort to laying off staff, cutting services, or in some cases closing their doors.

Still another concern may be whether the planner is familiar with a potential client’s particular financial issues. This is especially true of high net worth clients. They need to know a planner can relate to the complexities, responsibilities, and emotional challenges of managing wealth.

***

The Questions

All of these are legitimate concerns. Knowing a financial planner’s net worth, however, doesn’t address those concerns. To discover whether a planner is a good fit for you, it would be more useful to ask questions like the following:

Do you follow the same advice you give clients? Give me some examples.
Do you have six months’ living expenses in an emergency account?
Do you invest your money in the same manner you will invest mine?
If I were to run a credit report on you, what would it tell me?
What are some of the things you have learned from your financial mistakes?
Tell me what your company has in place for emergency planning and succession planning.
Tell me why you can relate to someone with my net worth and the issues I am facing.

Assessment

If a planner is offended by these questions or dances around answering them, that may be a red flag. If a planner offers answers freely and transparently, you may have found someone who provides exceptional service. Planners who share some of their own financial information are clearly committed to building the trust that is so essential between planner and client.

As a prospective client, you may hesitate to ask these questions even though you want to know the answers. Don’t be shy; ask.

More:

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

TEXT BOOK

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants

Filed under: "Ask-an-Advisor", Experts Invited, Financial Planning, Investing | Tagged: Careers and Net Worth, doctors salary, net worth, physician salary, rick kahler | 1 Comment »

CROWD-FUNDING: Income Tax Implications

Posted on August 31, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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***

Crowdfunding is a popular way to raise money online. People often use crowdfunding to fund raise for a business, for charity, or for gifts. It’s important to know that money raised through crowdfunding may be taxable.

Do you have to pay taxes on the money you receive from GoFundMe, etc?

Generally, you will not owe taxes on donated funds you receive from a crowdfunding platform. The IRS considers the money received from GoFundMe to be a gift instead of income, so it is typically not taxable. A gift is any transfer of cash or property you make to an individual without receiving full consideration in return, according to the IRS. People who donate money to GoFundMe to help pay for medical expenses are typically doing it out of generosity and do not expect anything in return.

Some money raised through crowdfunding may NOT be considered a gift.

Under federal tax law, gross income includes all income from any source, unless it’s excluded from gross income by law. In most cases, gifts aren’t included in the gross income of the person receiving the gift. Here’s what people involved in crowdfunding should know:

If a crowdfunding organizer is raising money on behalf of others, the money may not be included in the organizer’s gross income, as long as the organizer gives the money to the person for whom they organized the crowdfunding campaign.
If people donate to a crowdfunding campaign out of generosity and without expecting anything in return, the donations are gifts. Therefore, they will not be included in the gross income of the person for whom the campaign was organized.
However, not all contributions to crowdfunding campaigns are gifts and may be taxable.
When employers give to crowdfunding campaigns for an employee, those contributions are generally included in the employee’s gross income.

Taxpayers may want to consult a trusted tax pro for information and advice regarding how to treat amounts received from crowdfunding campaigns.

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Filed under: "Ask-an-Advisor", Accounting, CMP Program, Funding Basics, Taxation | Tagged: certified medical planner, CMP, CPA, crowd funding, go fund me, IRS | Leave a comment »

DAILY UPDATE: Medicare Part D Drugs, Kidney Donor Tax Credits, UnitedHealth and the Robust Stock Markets with DJIA at Record High

Posted on August 31, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

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.

http://www.MedicalBusinessAdvisors.com

SPONSORED BY: Marcinko & Associates, Inc.

***

http://www.MarcinkoAssociates.com

Daily Update Provided By Staff Reporters Since 2007.
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What’s up

Dell Technologies rose 4.33% after beating analyst estimates on both the top and bottom lines thanks to strong AI demand.
Marvell Technology popped 9.16% after beating analyst estimates on both the top and bottom lines thanks to, believe it or not, strong AI demand.
MongoDB gained 18.34% after beating analyst estimates on both the top and bottom lines thanks to, you’re never going to guess, strong AI demand.

What’s down

After accidentally announcing earnings earlier than it intended, Gap fell 1.67%, despite earnings actually looking pretty good.
Super Micro Computer sank another 2.48% as the fallout from short seller Hindenburg Research’s latest report continues.
Elastic NV plummeted 26.49% after the software maker announced a weak quarterly report and forecast worse quarters ahead.
Alnylam Pharmaceuticals stumbled 8.47% in spite of announcing positive Phase 3 trial results for its new heart disease drug. Shareholders don’t think the new drug is as groundbreaking as it could’ve been compared to offerings from competitors like BridgeBio, which popped 13.12% on the news.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The SPX climbed 56.44 points (1.01%) to 5,648.40, roughly flat for the week; the $DJI rose 228.03 points (0.55%) to 41,563.08, up almost 1% for the week; the NASDAQ Composite^®($COMP) added 197.19 points (1.13%) to 17,713.62, down nearly 1% from a week ago.
The 10-year Treasury note yield (TNX) climbed three basis points to 3.91% but fell about 20 basis points in August.
The CBOE Volatility Index^® (VIX) fell moderately to 14.96, well below levels above 30 recorded earlier this month.

CITE: https://tinyurl.com/tj8smmes

The Centers for Medicare and Medicaid Services (CMS) has been doing victory laps since announcing discounts on August 15 for 10 of the most expensive Medicare Part D drugs, a change that is set to go into effect in 2026. These discounts, called maximum fair prices (MFPs), kick off annual negotiations between the CMS and drug manufacturers. The negotiations were made possible by the Inflation Reduction Act (IRA), which also brings other changes such as Medicare Part D benefit redesign.

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

And, Remember NFTs? This is an excellent history of OpenSea, the largest NFT marketplace, and all the chaos within its walls.

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EDUCATIONAL TEXTBOOKS: https://tinyurl.com/4zdxuuwf

***

Filed under: "Ask-an-Advisor", Drugs and Pharma, Ethics, Health Economics, Health Insurance, Health Law & Policy, Information Technology, Investing, Marcinko Associates, Recommended Books, Sponsors, Taxation | Tagged: CMS, DJIA, DOW, Kidney donars, Marcinko, medicare, Medicare Part D, NASA, NASDAQ, Part D, S&P 500, SPX, textbooks, TNX, VIX, WSJ | Leave a comment »

CONSUMER CONFIDENCE INDEX: Six Month High!

Posted on August 30, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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DEFINITION: Consumer confidence index (CCI) is a standardized confidence indicator providing an indication of future developments of households’ consumption and saving.

The index is based upon answers regarding household’s expected financial situation, their sentiment about the general economic situation, unemployment and capability of savings. An indicator above 100 signals a boost in the consumers’ confidence towards the future economic situation, as a consequence of which they are less prone to save, and more inclined to spend money on major purchases in the next 12 months. Values below 100 indicate a pessimistic attitude towards future developments in the economy, possibly resulting in a tendency to save more and consume less.

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

This indicator is measured as an amplitude adjusted index, long-term average = 100.

MORE: https://medicalexecutivepost.com/2024/08/28/

US consumer confidence hits a six-month high

The decline in inflation and the expectation of an imminent interest rate cut have Americans feeling better about the economy than they have in a while, according to the latest update of the Conference Board’s consumer confidence index [CCI].

On the other hand, consumers are worried about the softening labor market. While the unemployment rate remains below historical standards at 4.3%, it has increased for four straight months—likely enough to convince J. Powell and the Federal Reserve to cut rates in September.

***

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Filed under: "Ask-an-Advisor", Accounting, Financial Planning, Funding Basics, Glossary Terms, LifeStyle | Tagged: CCI, CCI up, Consumer Confidence Index, Federal Reserve, FOMC, Jerome Powell | Leave a comment »

On Blockchain in Healthcare

Posted on August 30, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Five [5] Benefits and Five [5] Barriers

By http://www.MCOL.com

***

Conclusion

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

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

DOCTORS:

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

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“Business of Medical Practice 2.0” https://tinyurl.com/yb3x6wr8

HOSPITALS:

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

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

***

Filed under: "Ask-an-Advisor", "Doctors Only", Information Technology | Tagged: blockchain benefits, blockchain drawbacks, Blockchain in Healthcare | 3 Comments »

DAILY UPDATE: McKesson, CMS and Epic as Stocks Lost Ground

Posted on August 29, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

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.

http://www.MedicalBusinessAdvisors.com

SPONSORED BY: Marcinko & Associates, Inc.

***

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Daily Update Provided By Staff Reporters Since 2007.
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McKesson plans to grow its oncology platform by investing nearly $2.5 billion for a 70% stake in Community Oncology Revitalization Enterprise Ventures (Core Ventures), which was launched earlier this year by Florida Cancer Specialists & Research Institute (FCS). The institute is a group practice of more than 250 physicians, 280 advanced practice providers and almost 100 Florida locations that will remain independent following the deal’s close. The deal will bring advanced treatments and improved care to patients while reducing the overall cost of care, McKesson’s chief executive said.

The Centers for Medicare & Medicaid Services (CMS) issued a new report detailing total complaints related to the No Surprises Act and Affordable Care Act compliance. Providers and consumers earned $4.18 million in relief. More than 12,000 complaints were tied to the No Surprises Act compliance, 10,300 of which were against providers, facilities and air ambulance services. Most of such complaints were about surprise billing for non-emergency services at an in-network facility, followed by surprise billing for emergency services and good faith estimates.

And…Electronic health records giant Epic recently announced plans to transition its customers to TEFCA, the Trusted Exchange Framework and Common Agreement, a nationwide network to exchange patient data that was mandated by the 21st Century Cures Act back in 2016. On the same day, Carequality, an interoperability network that Epic belongs to, also announced that it plans to align with TEFCA. As one of the largest health IT vendors in the industry, Epic’s commitment to moving customers over to TECFA is noteworthy and will likely help to drive adoption, health IT experts say.

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

What’s up

Chewy gained 11.06% today as profits at the online pet supplies retailer surged last quarter, easily beating projections.
Ambarella, a semiconductor company, jumped 10.63% after topping Q2 revenue estimates.
Box rose 10.83% with the cloud company upping its sales outlook for the year.
AeroVironment was up 9.06% after the defense firm secured a $990 million five-year contract with the US Army.

What’s down

Super Micro Computer plunged 19.02% after announcing it would delay filing its annual financial disclosures with the SEC. Yesterday, short-seller Hindenburg Research accused the high-flying server maker of “glaring accounting red flags” and other sketchy business practices.
Abercrombie & Fitch’s 21% revenue growth last quarter wasn’t enough to impress investors, who sent the retailer’s stock down 16.99%. They got spooked when CFO Fran Horowitz mentioned the “increasingly uncertain environment” in the second half of the year.
Trump Media stock dipped below $20/share for the first time since the Truth Social owner went public in March. It’s down more than 75% from its intraday peak set that month.
Foot Locker beat top and bottom line estimates for the second quarter. But its stock dropped 10.24% when it kept its full-year outlook steady and announced store closures in Asia and Europe.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) fell 33.62 points (–0.60%) to 5,592.18; the Dow Jones Industrial Average^® ($DJI) declined 159.08 (–0.39%) to 41,091.42; the NASDAQ Composite^®($COMP) dropped 198.79 points (–1.12%) to 17,556.03.
The 10-year Treasury note yield (TNX) rose about one basis point to 3.84%.
The CBOE Volatility Index^®(VIX) climbed to 16.95, back toward levels seen nearly a week ago.

CITE: https://tinyurl.com/tj8smmes

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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ECONOMIC INDICATORS: “Lipstick Index” and “Cosmetic” Others?

Posted on August 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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DEFINITION: According to Wikipedia, the lipstick index is a term coined by Leonard Lauder, chairman of the board of Estee Lauder, used to describe increased sales of cosmetics during the early 2000s recession. Lauder made the claim that lipstick sales could be an economic indicator, in that purchases of cosmetics – lipstick in particular – tend to be inversely correlated to economic health. The speculation was that women substitute lipstick for more expensive purchases like dresses and shoes in times of economic distress.

Lauder identified the Lipstick index as sales across the Estee Lauder family of brands. Subsequent recessions, including the late-2000s recession, provided controverting evidence to Lauder’s claims, as sales have actually fallen with reduced economic activity. Conversely, lipstick sales have experienced growth during periods of increased economic activity. As a result, the lipstick index has been discredited as an economic indicator. The increased sales of cosmetics in 2001 has since been attributed to increased interest in celebrity-designed cosmetics brands.

In the 2010s, many media outlets reported that with the rise of nail art as fad in the English-speaking countries and as far afield as Japan and the Philippines, nail-polish had replaced lipstick as the main affordable indulgence for women in place of bags and shoes during recession, leading to talk of a Nail Polish index. Similar sentiment was noted during the coronavirus pandemic, when the mandated use of face masks to prevent the spread of the disease resulted in an increase of eye makeup purchases, suggesting a Mascara index.

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

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Now, decades after former Estée Lauder chairman Leonard Lauder first recognized the infamous “lipstick index”—the idea that cosmetics sales hold steady and sometimes spike during economic downturns—the same company posted a relatively downbeat earnings report.

Currently, the economy’s not great, but not abysmal, which makes for two possible interpretations of Estée Lauder’s latest report: Either the economy’s better than it seems, or the lipstick index was always a bit off.

The cosmetics giant reported declining sales figures, while weakening its full-year forecast. “For full-year fiscal 2023, we delivered organic sales growth and prestige beauty share gains in many developed and emerging markets, but Asia travel retail pressured results, particularly in skin care, and we continued to experience softness in North America,” the report said.

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Waffle House Index: https://medicalexecutivepost.com/2022/10/08/what-is-the-waffle-house-index/

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GOLD: Commodity Bullion

Posted on August 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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What it is: With its use as a commodity tracing back to Ancient Lydian merchants over 2,500 years ago, gold has the most staying power of any indicator on this list. When investors talk about gold prices today, they’re most likely referring to the price per ounce of gold bullion.

How it works: Gold is priced in U.S. dollars around the world. Investors can buy physical gold in the form of bullion or coins or go for more intangible gold securities, such as futures, ETF shares, or investments in gold mining companies.

Why it matters: In a 21st century economy where currencies aren’t pegged to the gold standard and credit cards are the medium of exchange, some investors argue gold is a relic. But others turn to the metal for diversification or as a “safe-haven asset”—something to buy during times of geopolitical or economic uncertainty because it holds onto its value.

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CCI: Consumer Confidence Index?

Posted on August 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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A consumer confidence index (CCI) is an economic indicator published by various organizations in several countries.

In simple terms, increased consumer confidence indicates economic growth in which consumers are spending money, indicating higher consumption. Decreasing consumer confidence implies slowing economic growth, and so consumers are likely to decrease their spending.

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

The idea is that the more confident people feel about the economy and their jobs and incomes, the more likely they are to make purchases. Declining consumer confidence is a sign of slowing economic growth and may indicate that the economy is headed into trouble.

FOR EXAMPLE:

Consumers’ assessment of current business conditions was mixed in November, 2022.

18.2% of consumers said business conditions were “good,” up from 17.7%.
On the other hand, more consumers, 26.7%, said business conditions were “bad,” up from 24.0%.

Consumers’ appraisal of the labor market was somewhat more favorable.

45.8% of consumers said jobs were “plentiful,” up from 44.8%.
13.0% of consumers said jobs were “hard to get,” unchanged from last month.

OFFICIAL: https://www.conference-board.org/topics/consumer-confidence

***

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FINANCING: A Medical Practice or Clinic?

Posted on August 27, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By http://www.MarcinkoAssociates.com

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Every medical practice, clinic or healthcare business needs financial organization. At Marcinko Associates, we provide it through our detailed annual reports.

For example, when starting out, the pre-construction phase of a medical practice is crucial, because it sets the course for a successful project. It includes business and financial assessments in which we learn about your goals, vision, financial realities and current clinic, practice and future facility needs.

MORE: https://marcinkoassociates.com/finances-practice/

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DAILY UPDATE: Nvidia Delayed and Covid Tests Mailed as Dow Rises and Technology Stocks Lag

Posted on August 27, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Nvidia will drop its Q2 numbers on Wednesday. Investors will also look for an update from CEO Jensen Huang about reported delays in production of the company’s highly anticipated new Blackwell chips.

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

Andersen, the US unit of Andersen Global, is considering an IPO in 2025, the Wall Street Journal reported. Andersen Global, an association of consulting firms, was formed in the wake of the 2002 collapse of Big Five accounting firm Arthur Andersen. The parent company has more than 17,000 employees worldwide and earned around $1.9 billion in revenue last year.

CITE: https://tinyurl.com/2h47urt5

What’s up

Kroger gained 1.6% as the antitrust trial began over its plan to merge with rival Albertsons in a $25 billion deal.
XPeng ADRs (American Depositary Receipts) spiked 7.90% on news that the Chinese EV maker’s CEO bought more than 2 million of the company’s shares. Those ADRs are still down nearly 50% this year. Here’s what an ADR is, by the way.

What’s down

Nvidia (-2.25%), Super Micro Computer (-8.27%), and Broadcom (-4.05%) stunk up the joint today. Investors are biting their nails ahead of Nvidia’s earnings report on Wednesday.
Uber dropped 2.30% on a day it was hit with a record $324 million fine by the Dutch data protection regulator for violating EU personal data rules.
Intel plopped 2% after CNBC reported on Friday that the chipmaker has hired advisors to help defend the castle against activist investors.

CITE: https://tinyurl.com/tj8smmes

Here’s where the major benchmarks ended:

The SPX dropped 17.77 points (–0.32%) to 5,616.84; the Dow Jones Industrial Average^® ($DJI) rose 65.44 points (0.16%) to 41,240.52; the NASDAQ Composite^®($COMP) fell 152.02 points (–0.85%) to 17.725.77.
The 10-year Treasury note yield (TNX) inched up about one basis point to nearly 3.82%.
The CBOE Volatility Index^®(VIX) edged up to 16.09 but remains below its historic average.

Americans can receive free Covid-19 tests through the mail beginning next month.

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NDAs: Federal Judge Strikes Down Non-Compete [Disclosure] Agreement Ban

Posted on August 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Health Capital Consultants, LLC

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On August 20th, 2024, a Texas federal judge stopped the FTC’s ban on non-compete agreements from going into effect on September 4, 2024. This decision comes after the FTC issued a final rule on April 23, 2024, that bans employers from imposing non-competes on their employees. The FTC asserted that this exploitative practice kept wages low and suppressed new ideas. While the FTC’s ban will affect all industries – not just healthcare – it comes at a time when healthcare employers across the U.S. are struggling with staffing shortages.

This Health Capital Topics article reviews the court’s ruling and discusses the FTC’s ban on noncompete agreements. (Read more…)

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Selecting a Medical Practice Business Entity?

Posted on August 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By http://www.MarcinkoAssociates.com

Incorporating a practice is something many doctors are unaware but at Marcinko Associates, Inc., we are here to help you in getting your medical practice or clinical business up and running. We believe this category is by far the most important when acquiring or starting a new practice as well as a continuing practice. Selecting a business entity that will be the most conducive to your overall clinic or medical practice objectives is vital.

For example, clinic or medical business entity selection would include: Sole Proprietorship, Limited Liability Company, S-Corporation, C-Corporation, Professional Association or Non-profit organization.

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Valuation of Hospitals [Competitive Environment]

Posted on August 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Health Capital Consultants, LLC

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Demand for a variety of healthcare services – including those provided by hospitals – is likely to increase significantly in the near future, primarily as a result of the changing demographics of the U.S. population, most notably the growth in the number of Americans over the age of 65. Indeed, a Health Affairs study found that population aging alone will create approximately 0.74% annual growth in the demand for inpatient hospital services. While hospital consolidation is leading to operational efficiency for hospitals in providing services to an increasing number of patients, the federal government’s intensifying focus on anti-competitive behaviors in healthcare may hinder traditional consolidation efforts going forward.

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

This second installment in a five-part series on the valuation of hospitals reviews the competitive environment in which hospitals operate. (Read more...)

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WHAT IS COMMON STOCK “PAR” VALUE?

Posted on August 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

WHAT IS COMMON STOCK “PAR” VALUE?

DEFINITION:

For common stock, the value on the books of the corporation. It has little to do with market value or even the original price of shares at first issuance. The difference between par and the price at first issuance is carried on the books of a corporation as “paid-in capital” or “capital surplus.”

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

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Par value for preferred stocks is also liquidating value and the value on which dividends (expressed as a percentage) are paid, generally $100 per share.

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DAILY UPDATE: Medicare Part C and CON Laws as Stocks Drift Higher

Posted on August 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Read: Georgia’s bipartisan effort to amend its “certificate of need” system to bring back shuttered rural hospitals. (KFF Health News)

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Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 63.97 points (1.15%) to 5,634.61, up 1.5% on the week; the Dow Jones Industrial Average^® ($DJI) added 462.30 points (1.14%) to 41,175.08, up 1.3% for the week; the NASDAQ Composite^®($COMP) advanced 258.43 points (1.47%) to 17,877.79, up 1.4% for the week.
The 10-year Treasury note yield (TNX) fell nearly six basis points to just under 3.81%.
The CBOE Volatility Index^® (VIX) dropped sharply to 15.79, the lowest close since Monday.

CITE: https://tinyurl.com/2h47urt5

As Medicare Advantage (MA) enrollment grows, hospitals are breaking up with MA [Part C] insurance plans. Becker’s Healthcare reported that, so far in 2024, at least 17 systems ended a contract with an MA insurer.

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TRANSACTIONAL STOCK ANALYSIS: What Is It?

Posted on August 23, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Versus Technical Analysis

By Staff Reporters

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In traditional finance transaction data is guarded by exchanges, brokers, banks and regulators. It’s not accessible to everyone and big players pay a fortune for it.

But, in crypto, Transaction Data is public and on-chain – but it’s not usable by everyone. So, manually making sense of raw blockchain data is practically impossible. The data needs to be processed and analyzed to be made useful. That’s what sophisticated blockchain analytics tools are doing.

The combination of on-chain data and transaction analysis is something that hasn’t been before – in crypto or traditional finance. Getting access to transaction data and tools for searching and analyzing it will unlock a goldmine of potential insight.

People who have been on the inside of projects and see how the sausage is made know that the explanations for price movements are often simple and based on key players buying and selling. When the biggest holders are dumping the price is likely to go down. When a major new buyer takes a position prices are likely to go up.

That’s insight traditional Technical Analysis cannot provide, because it’s limited to looking at price movements. Transaction data, instead, is the underlying activity that generates prices in crypto.

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

Technical Analysis: https://medicalexecutivepost.com/2022/06/23/the-technicians/

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FAIR MARKET VALUATION DETERMINATION: Medical Practices or Clinics

Posted on August 21, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL PRACTICE OR AMBULATORY SURGERY CENTER

MARCINKO ASSOCIATES, Inc.

http://www.MARCINKOASSOCIATES.com

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FAIR MARKET VALUATION DETERMINATION

There are a Myriad of Reasons for Obtaining a Medical Practice Valuation and Appraisal Engagement:

Outright selling-buying
Partnership and Associate buy-in / buy-out
Mergers and Acquisitions
Organic growth tracking
Hospital integrations
Private and public reporting
Financing and Venture Capital
Estate and tax planning

Our Capability

We have the ability to provide extensive analysis of value components in healthcare practices and provide appraisals based on business, economic, and market conditions. This involves detailed examination of financials and clinical data in the context of numerous factors including medical specialty, physician supply and demand, payer mix, regulatory environment, regional dynamics, and risk premium.

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

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What is the Investing “EFFICIENT MARKET ” Hypothesis?

Posted on August 20, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

According to colleagues Jeffrey S. Coons PhD CFA, the Efficient Market Hypothesis (EMH) states that securities are fairly priced based on information about their underlying cash flows and that physician investors should not expect to consistently outperform the market over the long-term.

There are three distinct forms of EMH that vary by the type of information that is reflected in a security’s price:

Weak Form: This form holds that investors will not be able to use historical data to earn superior returns on a consistent basis. In other words, the financial markets price securities in a manner that fully reflects all information contained in past prices.

Semi-Strong Form: This form asserts that security prices fully reflect all publicly available information. Therefore, investors cannot consistently earn above normal returns based solely on publicly available information, such as earnings, dividend, and sales data.

Strong Form: This form states that the financial markets price securities such that, all information (public and non-public) is fully reflected in the securities price; investors should not expect to earn superior returns on a consistent basis, no matter what insight or research they may bring to the table.

While a rich literature has been established for doctors regarding to test whether EMH actually applies in any of its three forms in real world markets – probably the most difficult evidence to overcome for backers of EMH is the existence of a vibrant money management and mutual fund industry charging value-added fees for their services.

In fact, no less than Warren Buffett has suggested that the markets are decidedly not efficient.

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PREFERRED versus COMMON Stock?

Posted on August 20, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Is there a Difference?

What is the Difference?

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By Dr. David Edward Marcinko MBA MEd CMP®

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A common stock is the least senior of securities issued by a company.

A preferred stock, in contrast, is slightly more senior to common stock, since dividends owed to the preferred stockholders should be paid before distributions are made to common stockholders.

However, distributions to preferred stockholders are limited to the level outlined in the preferred stock agreement (i.e., the stated dividend payments). Like a fixed income security, preferred stocks have a specific periodic payment that is either a fixed dollar amount or an amount adjusted based upon short-term market interest rates.

However, unlike fixed income securities, preferred stocks typically do not have a specific maturity date and preferred stock dividend payments are made from the corporation’s after tax income rather than its pre-tax income. Likewise, dividends paid to preferred stockholders are considered income distributions to the company’s equity owners rather than creditors, so the issuing corporation does not have the same requirement to make dividend distributions to preferred stockholders.

So, preferred stock is generally referred to as a “hybrid” security, since it has elements similar to both fixed income securities (i.e., a stated periodic payments) and equity securities (i.e., shareholders are considered owners of the issuing company rather than creditors).

Convertible preferred stocks (and convertible corporate bonds) are also considered hybrid securities since they have both equity and fixed income characteristics. A convertible security whether a preferred stock or a corporate bond, generally includes a provision that allow the security to be exchanged for a given number of common stock shares in the issuing corporation. The holder of a convertible security essentially owns both the preferred stock (or the corporate bond) and an option to exchange the preferred stock (or corporate bond) for shares of common stock in the company.

ASSESSMENT: Thus, at times the convertible security may behave more like the issuing company’s common stock than it does the issuing company’s preferred stock (or corporate bonds), depending upon how close the common stock’s market price is to the designated conversion price of the convertible security.

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

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What is an INVERSE ETF?

Posted on August 19, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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What are inverse ETFs?

An inverse ETF, often known as a bear or short ETF, is an exchange-traded fund designed to profit from a market decline. These short-term, publicly traded investments are utilized by investors who believe that a particular market or individual security will lose value in the near future. They may use inverse ETFs as a way of hedging losses during a downturn.

“Inverse ETFs are a tool to hedge a stock portfolio,” according to John DeYonker. “If the S&P 500 is your benchmark, and it goes up 1%, then your hedge will go down 1% and vice versa. Hedging with inverse ETFs can reduce volatility for investors—it’s like insurance.”

Investors may also use inverse ETFs as a way to take advantage of a predicted decline. In this way, they may be used as an alternative to short selling. For example, if an investor believes that the oil industry will have a setback in the immediate future, they may choose to purchase an inverse ETF of securities tied to energy producers. If correct in their prediction, the investor’s inverse ETF may recognize a profit. If the investor is incorrect, and the market or individual security increases in price, they may see a loss.

An investor who believes that the S&P 500 will decline, for example, may choose to purchase shares of the ProShares Short S&P 500. This inverse ETF’s value is inversely proportional to the overall S&P 500 index.

Inverse ETFs are generally considered to be highly volatile investments, as their losses typically compound daily. This makes inverse ETFs more risky than the index to which they are tied.

CITE: https://en.wikipedia.org/wiki/Exchange-traded_fund

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J. POWELL: To Speak At Jackson Hole

Posted on August 19, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Later this week, central bankers will meet in the shadow of the Tetons for the Jackson Hole Symposium, an annual retreat for global economic officials to talk monetary policy.

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The main event: Federal Reserve Chairman Jerome Powell’s keynote speech on Friday, which investors hope will clarify the timing and pace of interest rate cuts.

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DAILY UPDATE: Telehealth Down but Stock Markets Up for the Week

Posted on August 18, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

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“

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In April, UnitedHealth Group announced it was shutting down its Optum Virtual Care program. Days later, Walmart announced it would shutter both Walmart Health and Walmart Health Virtual Care.

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And in July, Teladoc posted a net loss of $838 million in Q2. The drop was largely driven by an impairment charge of ~$800 million for BetterHelp, the virtual mental health platform it acquired in 2015, Fierce Healthcare reported. Executives attributed the decline to increased customer acquisition costs, among other factors.

CITE: https://tinyurl.com/tj8smmes

Finally, Stocks are way out of whack with reality, the WSJ argues. Nevertheless, a slew of encouraging economic data helped propel the S&P 500 to its best week of the year—a welcome change from the whiplash volatility of the week before. Bayer jumped after scoring an appeals court victory in a case over claims its Roundup weed killer causes cancer.

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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CREDIT CARD SWIPE FEES: Capped

Posted on August 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Visa and Mastercard agree to $30 billion deal to cap credit card swipe fees

By Staff Reporters

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After a nearly 20-year legal battle, the credit card behemoths said they’ll slightly reduce the 2% fees that they charge retailers every time a consumer uses one of their cards.

Retailers will also be able to adjust prices at checkout depending on the type of card used. The banks that issue cards—like JPMorgan Chase, Citigroup, and Bank of America—will likely bear the brunt of the changes, as they typically receive most of the revenue from swipe fees.

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

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USE: Credit Cards -NOT- Debit Cards

Posted on August 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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When you plastic, use a credit card instead of a debit card whenever possible.

Credit cards are protected under The Fair Credit Billing Act (FCBA), while debit cards are protected by the Electronic Fund Transfer Act (EFTA). As the Federal Trade Commission explains, the FCBA limits your potential liability to $50, while the EFTA can leave you responsible for up to $500 of fraudulent charges (and occasionally more) in certain situations.

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Filed under: "Ask-an-Advisor", Glossary Terms, Insurance Matters, Investing, LifeStyle, Op-Editorials | Tagged: credit card, debit card, EFTA, Electronic Fund Transfer Act, Fair Credit Billing Act, FCBA | 1 Comment »

DAILY UPDATE: Cisco Lays Off as Stock Markets Blast Off

Posted on August 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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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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What’s up

Lumentum Holdings soared 14.74% after the laser maker beat estimates for quarterly revenue and earnings.
Ulta Beauty skyrocketed 11.17% on the news that Warren Buffett invested in the company last quarter. Sirius XM rose 3.78% for the same reason.
Dell Technologies jumped 7.16% after JP Morgan analysts raised their price target on the stock from $155 to $160.
Robinhood popped 4.83% thanks to an upgrade from Deutsche Bank analysts from Hold to Buy.
Deere & Co. rose 6.35% due to a stronger-than-expected earnings report.
Tesla accelerated 6.34% on hopes that a healthier US consumer means better auto sales ahead.

What’s down

T-Mobile US fell 0.95% after the Committee on Foreign Investment in the US fined the company after sensitive customer data was exposed.
Dillard’s slid 10.85% after reporting lower earnings and sales than expected as the retailer struggles to lure customers through its doors.
AT&T stumbled 2.78% on the news that a major shareholder sold off a large portion of its stake in the company last quarter.
Pilgrim’s Pride dropped 3.28% thanks to a re-rating from Bank of America analysts pushing the company from Buy to Neutral.
Grab Holdings sank 7.42% after the app maker reported a terrible quarter.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The S&P 500 index rose 88.02 points (1.61%) to 5,543.23; the Dow Jones Industrial Average^®($DJI) added 554.67 points (1.39%) to 40,563.06; the NASDAQ Composite advanced 401.89 points (2.34%) to 17,594.50.
The 10-year Treasury note yield (TNX) rebounded about 10 basis points to nearly 3.93%, lifted by strong U.S. data.
The CBOE Volatility Index^® (VIX) finished at 15.45, the lowest since July 23 and back under the historic average near 19.

CITE: https://tinyurl.com/tj8smmes

Cisco will lay off 7% of its workforce to cut costs, although it projects an improvement in sales.

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DAILY UPDATE: Hospital Private Equity and AI with Upbeat DJIA

Posted on August 15, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Private equity (PE) firms might make it rain cash for investors, but hospitals under their ownership are facing an asset drought, according to a research letter published in JAMA on July 30th. While fans of PE argue it can bring much-needed financial resources to struggling hospitals, the data disagrees. “Private equity acquisitions appear to have depleted, rather than augmented, hospital assets,” the authors, a group of physicians from medical institutions across the US, wrote.

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What’s up

Kellanova, maker of Eggo Waffles, popped 7.73% on the news that Mars, maker of M&Ms, will buy the company for $83.50 per share.
Victoria’s Secret rallied 16.20% due to the appointment of Hillary Super as CEO.
Allstate leapt 5.19% on the news that it will sell its employer voluntary benefits business to StanCorp Financial Group for $2 billion.
Cardinal Health jumped 3.52% thanks to an impressive earnings report and a glowing forecast for fiscal year 2025.
Flutter, parent company of FanDuel, rose 7.94% after a strong beat-and-raise earnings report.

What’s down

Peloton Interactive stumbled 4.64% on the news of a deal allowing Google’s Fitbit users to have access to Peloton classes.
Brinker International sank 10.51% after the parent company of Chili’s announced lower-than-expected earnings last quarter.
Ouster plummeted 27.44% after the lidar manufacturer reported disappointing revenue last quarter and forecast for worse to come next quarter.
Starbucks fell 2.09% as investors took some profits after yesterday’s gigantic pop.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The S&P 500 rose 20.78 points (0.38%) to 5,455.21; the Dow Jones Industrial Average^® ($DJI) added 242.75 points (0.61%) to 40,008.39; the NASDAQ Composite^®($COMP) squeaked out a slight gain of 4.99points (0.03%) to 17,192.60.
The 10-year Treasury note yield (TNX) dropped three basis points to 3.82%, the lowest close in more than a week.
The Cboe Volatility Index^® (VIX) fell to 16.22, the lowest since July 23.

CITE: https://tinyurl.com/tj8smmes

Stat: 21%. That’s the percentage of US physicians who are still paying off student loan debt. (Becker’s Hospital Review)

Quote: “The federal government is particularly ineffective and slow these days.”—Rep. Brianna Titone, a Colorado Democrat, on why states need to “step up” and make their own laws regulating the use of artificial intelligence in healthcare (Axios)

Read: A US Olympic athlete is taking advantage of free healthcare to catch up on preventive care while in Paris. (the Washington Post)

Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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Filed under: "Ask-an-Advisor", Financial Planning, Information Technology, Investing, Marcinko Associates, Recommended Books, Sponsors | Tagged: AMA, DJIA, DOW, hospital private equity, Marcinko, NASA, NASDAQ, pe, Private Equity, S&P 500, SPX, textbooks, TNX, VIX, WSJ | Leave a comment »

The Long and Short of Portfolio Construction

Posted on August 14, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Long-Short Portfolio Construction vs. Long-Only

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[By Dr. David Edward Marcinko MBA MEd CMP™]

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Long-Short is an active portfolio construction discipline that balances long positions in high expected return securities and short positions in low expected return securities of approximately equal value and market sensitivity. This type of portfolio is “neutralized” or immunized against changes in value of the underlying market and, therefore, has zero systematic (beta) risk. If the selected securities perform as expected, the long-short positions will provide a positive return, whether the market rises or falls.

Misconceptions

While long-short portfolios are often perceived and portrayed as much costlier and much riskier than long-only, it is inherently neither. Much of the incremental cost and risk is either largely dependent on the amount of leverage employed or controllable via optimization. Those costs and risks that are not controllable—financial intermediation costs of borrowing shares to short, the trading costs incurred to meet long-short balancing, margin requirements, uptick rules, and the risks of unlimited losses on short positions—do not invalidate the viability of long-short strategies.

Long-Short Advantages

Compared with long-only portfolios, long-short portfolios offer enhanced flexibility not only in the control of risk and pursuit of return, but also in asset allocation. Basic market-neutral portfolios achieve a return consisting of three components: (1) interest on funds held as a liquidity buffer, (2) interest on the short sale proceeds maintained with the broker, and (3) the return spread between the aggregate long and aggregate short positions in the portfolios.

Disadvantages

Share borrow-ability and uptick rules make short-selling more difficult and costly than going long. Also, it may be legally or contractually restricted for some investors, such as mutual funds. Inefficiencies may be concentrated in overpriced stocks and, accordingly, short sales of the most overpriced stocks may offer higher positive returns than long purchases of underpriced stocks.

Assessment

Long-only portfolios are confined to altering the weighting of securities within an index in order to realize an excess return. Long-short portfolios are not constrained by index weights and, because they can short securities, they can “underweight” a security by as much as investment insights and risk considerations dictate. Long-short portfolios can be enhanced by “equitizing” them using stock index futures.

Note: “The Long and Short on Long-Short” by Bruce I. Jacobs and Kenneth N. Levy, The Journal of Investing, Spring 1997, pp. 73–86, Institutional Investor, Inc.

Conclusion

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Filed under: "Ask-an-Advisor", CMP Program, Investing, Portfolio Management, Touring with Marcinko | Tagged: CMP, david marcinko, Investing, long portfolios, long-short portfolios, Marcinko Associates, short portfolios, www.certifiedmedicalplanner.com | 5 Comments »

COMMODITIES UTILITY: Gold v. Silver

Posted on August 14, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Commodities trading means you’re buying and selling raw materials rather than finished products (like a house) or financial assets (like stocks and bonds). Commodities are assets like corn, coffee, lumber and ore. One common form of commodities trading is investing in precious metals, namely gold and silver. As an investment asset, gold and silver have very different properties and uses in a portfolio.

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

Gold vs. Silver: Utility

The biggest thing that differentiates precious metal investing from other commodity investing is utility. For most other commodities, investors judge value based on supply and consumer demand. If you want to invest in coffee beans, for example, you can judge prices by how much coffee people are currently drinking, how tastes are changing, etc.

Precious metals are different in that they have relatively low commercial utility. Compared with other metals, here are relatively few consumer or industrial uses for assets like gold and silver.

However, silver does have much more industrial and commercial use than gold. Approximately half of all silver bought and sold on the market is used commercially, with applications ranging from dentistry to electronics. (This is still quite small compared to other metals, which are almost entirely used for production.)

By contrast, gold has very few commercial applications aside from jewelry. This gives investors a basis on which to judge and predict price movements for silver, since you can make decisions based on factors such as industry need and how the global economy is moving.

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Filed under: "Ask-an-Advisor", Alternative Investments, Investing | Tagged: commodities, COMMODITIES UTILITY: Gold V. Silver, gold, silver | Leave a comment »

WTI: Crude Oil

Posted on August 14, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

West Texas Intermediate

By Staff Reporters

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What it is: The North American crude oil benchmark, known as West Texas Intermediate (WTI), is one of three main oil benchmarks used around the globe. While WTI is sourced primarily from Texas, it’s considered one of the highest-quality oils and is often refined into gasoline.

How it works: WTI is the physical commodity behind oil futures contracts traded on the New York Mercantile Exchange. Oil futures = financial instruments that allow investors to buy “abstract oil.” When the futures contract expires, that investment is converted into IRL oil, cashed out, or rolled into a future futures contract.

Why it matters: Oil prices are affected by economic conditions, supply and demand, and geopolitical forces. The coronavirus pandemic caused a historic collapse in prices this spring, and while prices have stabilized, the outlook is shaky.

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Filed under: "Ask-an-Advisor", Financial Planning, Investing | Tagged: crude oil, gas, gasoline, IRL, NY Mercantile Exchange, oil, oil futures, West Texas Intermediate | Leave a comment »

Why I Hate Non-Publicly Traded REITS

Posted on August 13, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

On Product Frustration

By Lon Jefferies MBA CFP® CMP®

As my experience in the financial planning and investment advisory industries has grown over the years, there is one investment that I’ve seen no logical reason to own — non-publicly traded real estate investment trusts.

Josh Brown, one of my favorite analysts and author of TheReformedBroker.com nailed each of my frustrations with these products. Here is a significant excerpt from his post:

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I consider non-traded REITs or nREITS to be part of the group of investments that are just absolute murderholes for clients – they pay the brokers so much that they cannot possibly work out (and they rarely do without all kinds of aggravation and additional costs). Further, I have yet to hear a single credible explanation as to why a broker would recommend a non-traded REIT over a public REIT other than compensation. The only explanation that makes sense to me is that 7% is a lot more than the 1% commission you get doing an agency trade on a NYSE-traded REIT. A reader with experience in the industry sent this to me and I found it hilarious. Below, a fictional, transparent conversation between an indie broker and his “client” that would never occur…

If Brokers Were Transparent:

Rep:

Before we wrap up our quarterly portfolio review I would like to talk to you about a new investment I think you might be interested in. You have been looking for more income and this is an investment vehicle that pays a 7% dividend.

Client:

Sounds great, give me the details.

Rep:

With your portfolio size and risk tolerance I would recommend a $100,000 investment. Given that amount let’s first go over the fees. If you invest $100,000 I will be paid a commission of $7,000. My firm is going to get $1,500 – $2,000 in revenue share. My wholesaler, the salesman that works for the investment’s sponsor company, will get $1,000. He is a great guy, buys me dinner and takes me golfing. The sponsor company is going to get around $3,000 to pay for some of the costs they incurred in setting up the investment. So after Day 1 there will be around $87,000 left over to actually invest. I bet you are getting excited.

Client:

Are you on drugs? Why would I pay 13% in fees on anything?

Rep:

Don’t worry, it won’t feel like you are paying $13,000 in fees. The rules allow my firm to report your investment at $100,000 on your statement. You never really know what its worth but you will think you never lost money. Pretty sweet huh?

Client:

You have to be kidding.

Rep:

No, this is a really good investment. Let me tell you about the income component before you jump to any conclusions. Like I said this investment pays a 7% dividend and the dividend won’t change.

Client:

That sounds high and how do you know it won’t change?

Rep:

You see, the sponsor just picks the 7% dividend number out of thin air. Here’s how it works. You see the vehicle you are going to invest in is new and it’s going to take the firm a while before your net $87,000 is actually invested. Later on, maybe 2-4 years from now they will have the money fully invested and it will generate actual cash flow. So they just pay a quarterly dividend of 7% by giving you your money back. This is great from a tax perspective because return of capital isn’t taxed as income.

Client:

Are we on hidden camera or something?

Rep:

Ha, you are funny. I bet this next benefit will change your mind.

Client:

I hope so or I should start looking for another financial advisor.

Rep:

This is the best feature. You can’t sell your investment until the sponsor has the opportunity to create liquidity. You might be locked up in this investment for 7-10 years.

Client:

This feels like the Twilight Zone. Your firm allows you to sell this crap?

Rep:

Oh yeah, our firm sells a ton of it. In fact independent broker dealer firms like mine sold over $20 billion of these investments in 2013. Think about that. Reps like me made over $140 million dollars and our firms pocketed $20-$30 million.

Client:

This is crazy, what is this investment?

Rep:

Non-traded REITs. $100,000 sound about right?

***

Josh touched on every part of these investments that I despise — excessive commission paid to the so-called “financial advisor” (salesman), a supposed “dividend” that is really just paying the investor his own money back (essentially providing an interest-free loan), and a complete lack of liquidity and transparency.

When I begin working with a new client who owns one of these products, it is impossible to obtain accurate, current information on the investment (not even a true value is apparent). Even worse, if the client wants to sell the investment he would need to do so at pennies on the dollar. For the most part, once an investor purchases one of these products he just needs to forget about it and hope that one day he can get his money back.

Assessment

The bottom line is that if your advisor ever recommends a non-publicly traded REIT, I’d strongly recommend you walk out the door and start searching for a true financial advisor with a fiduciary responsibility to act in your best interest.

Conclusion

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Filed under: "Ask-an-Advisor", Ethics, Events-Planner, Experts Invited, Financial Advisor Listings, Financial Planning, Investing, Marcinko Associates | Tagged: Lon Jefferies MBA, Marcinko, Non-Publicly Traded REITS, real-estate, REITS | 4 Comments »

What is an “INTERVAL” Mutual Fund?

Posted on August 12, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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An interval fund is a closed-end mutual fund that buys back shares only during specific intervals. Shares of the First Eagle Credit Opportunities Fund aren’t traded on public exchanges, and purchases or sales take place at the close of business, at the net asset value (NAV).

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A fund’s NAV is simply the sum of its assets divided by the number of shares. A traditional open-ended mutual fund isn’t publicly traded either, and investors can buy or sell at NAV at the market close every business day. This means the manager of an open-ended fund has limited investment choices because a relatively high level of liquidity is needed to handle daily re-demptions.

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An interval fund sets intervals (time periods) during which shares can be sold back to the fund manager and the number of shares it is willing to redeem during any interval. This makes it possible for the manager to go for higher yields by participating in less liquid markets.

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DAILY UPDATE: Consumer Spending with Spotlight on Intel

Posted on August 12, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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US consumers in the spotlight: How much have you been shopping? We’ll find out this week when crucial July retail sales data is released on Thursday, and Walmart and Home Depot report earnings. The resilience of the US consumer is at the heart of recent concerns over a potential downturn since consumer spending drives 70% of the US economy. So far this earnings season, companies have given more mixed signals than a menu offering jumbo shrimp.

CITE: https://tinyurl.com/2h47urt5

Tech giant Intel will be shedding more than 15% of its workforce—or over 19,000 employees—as part of a plan to cut $10 billion in costs after it failed to meet quarterly expectations.

Intel reported revenue of $12.83 billion on expectations of $12.94 billion in revenue in its second quarter 2024 earnings, reported CNBC. The company reported plunging from a net income of $1.48 billion in Q2 2023 to a net loss of $1.61 billion YOY.

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