BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Many doctors are surprised to learn of an alternative investment known as a hedge fund, pooled investment vehicle or private investment fund. Unlike mutual funds, they can be structured in many ways. However, these funds cannot be marketed or advertised, but they are far from illegal or illicit.
In fact, physicians were among the early investors in one the most successful hedge funds. Warren Buffett got his start in 1957 running the Buffett Partnership, a hedge fund not open to the public. His first appearance as a money manager was before a group of physicians in Omaha, Nebraska. Eleven decided to invest some money with him. A few then followed into Berkshire Hathaway Inc, now among the most highly valued companies in the world.
And, more recently, Scion Asset Management® LLC, is a private investment firm founded and led by my eloquent colleague Michael J. Burry, MD and featured in the movie, The Big Short. Other hedge fund mangers of note include: George Soros, Carl Icahn, Ken Griffin, David Tepper, John Paulson and Bill Ackman.
A hedge fund is a limited partnership of private investors whose money is managed by professional fund managers who use a wide range of strategies; including leveraging [debt] or trading of non-traditional assets [real-estate, collectible, commodities, cyrpto-currency, etc] to earn above-average returns. Hedge funds are considered a risky alternative investment and usually require a high minimum investment or net worth. This person is known as an “accredited investor” or “Regulation D” investor by the US Securities Exchange Commission and must have the following attributes:
A net worth, combined with spouse, of over $1 million, not including primary residence
An income of over $200,000 individually, or $300,000 with a spouse, in each of the past two years
The hurdle rate is part of the fund manager’s performance incentive compensation. Also known as a “benchmark,” it is the amount, expressed in percentage points an investor’s capital must appreciate before it becomes subject to a performance incentive fee. Podiatrists should view the hurdle rate as a form of protection or the fee arrangement.
The hurdle rate benchmarks a single year’s performance and may be considered mutually exclusive of any other year, or the hurdle rate may compound each year. The former case is more common. In the latter case, a portfolio manager failing to attain a hurdle rate in the first year will find the effective hurdle rate considerably higher during the second year.
Once a fund manager attains the hurdle rate, the investor’s capital account may be charged a performance incentive fee only on the performance above and beyond the hurdle rate. Alternatively, the account may be charged a performance fee for the entire level of performance, including the performance required to attain the hurdle rate. Other variations on the use of the hurdle rate exist, and are limited only by the contract signed between the fund manager and the investor. The hurdle rate is not generally a negotiating point, however.
Example: A fund charges a performance fee with a 6 percent hurdle rate, calculated in mutually exclusive manner. A podiatrist places $100,000 with the fund. The first year’s performance is 5 percent. The doctor therefore owes no performance fee during the first year because the portfolio manager did not attain the hurdle rate. During year two, the portfolio manager guides the fund to a 7 percent return. Because the hurdle rate is mutually exclusive of any other year, the portfolio manager has attained the 6 percent hurdle rate and is entitled to a performance fee.
High Water Mark
Some hedge funds feature a “high water mark” provision known as a ”loss-carry forward.” As with the hurdle rate, the high water mark is a form of protection. It is an amount equal to the greatest value of an investor’s capital account, adjusted for contributions and withdrawals. The high water mark ensures that the manager charges a performance incentive fee only on the amount of appreciation over and above the high water mark set at the time the performance fee was last charged. The current trend is for newer funds to feature this high water mark, while older, larger funds may not feature it.
Example: A fund charges a 20 percent performance fee with a high water mark but no hurdle rate. A podiatrist contributes $100,000 to the fund. During the first year, the hedge fund manager grows that capital account to $110,000 and charges a 20 percent performance fee, or $2,000. The ending capital account balance and high water mark is therefore $108,000. During year two, the account falls back to $100,000, but the high water mark remains $108,000. During year three, in order for the manager to charge a performance fee, the manager must grow the capital account to a level above $108,000.
Claw Back Provision
Rarely, a hedge fund may provide investors with a “claw back” provision. This term results in a refund to the investor of all or part of a previously charged performance fee if a certain level of performance is not attained in subsequent years. Such refunds in the face of poor or inadequate performance may not be legal in some states or under certain authorities.
ASSESSMENT
Managers of hedge funds, like colleague Dimitri Sogoloff MBA who is the CEO of Horton Point investment-technology firm, often aim to produce returns that are relatively uncorrelated with market indices and are consistent with investors’ desired level of risk.
While hedging may reduce some risks overall, they cannot all be eliminated. According to a report by the Hennessee Group, hedge funds were approximately one-third less volatile between 1993 and 2010.
For a podiatrist who already holds mutual funds and/or individual stocks and bonds, a hedge fund may provide diversification and reduce overall portfolio risk. Consider investing in them with care.
2. Burry, Michael, J: Hedge Funds [Wall Street Personified]. In, Marcinko, DE and Hetico, HR: Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™] Productivity Press, New York, 2017.
3. Marcinko, DE and Hetico, HR: Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]. Productivity Press, New York, 2015.
4. Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, NY 2006
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
WHAT YOU “MUST KNOW“ ABOUT FINANCIAL ADVISORY FEES
Investment fees still matter despite dropping dramatically over the past several decades due to computer automation, algorithms and artificial intelligence, etc. And, they can make a big difference to your financial health. So, before buying any investment, it’s vital to uncover all real financial advisor and stock broker costs.
1. Up-front salesperson commissions. It is easy to ask; “If I buy this investment today and want to get out tomorrow, how much money do I get back?” If the answer is not “all your money,” the difference is probably upfront fees and commissions. These fees may run as high as 30% of the money invested. If you were to earn 5% a year on the investment, it would take 8 years just to break even.
2. Ongoing advisory fees. These are monthly, quarterly, or annual fees paid to advisors for their investment advice and oversight. This includes working with you to pick the asset classes, set diversification, select a portfolio manager, optimize taxes, re-balance holdings and other periodic tasks.
These fees have many names including wrap fee or investment advisory fees. The normal “rule of thumb” is 1% of assets managed, although fees can range from 0 to 7%. Today, it can even be as low as .5%. It can be charged even if the advisor receives an upfront commission. It can be easy to see, or hidden in the fine print.
3. Additional service fees. Find out specifically what services are included financial advisory fees. Additional fees for financial planning or other services are rarely disclosed. They can range from minimal hand-holding focused on your investments to comprehensive financial planning.
4. Ongoing managerial expense ratio fees. These are incredibly well hidden that you may not see them in your statements or invoices. The only way to know is to read the prospectus or other third party analysis, like Morningstar.com. And, they can vary greatly for the same investment, depending on the class of share you buy.
For example, American Fund’s New Perspective Fund’s expense ratio ranges from 0.45% to 1.54%. The average expense ratio of a mutual fund that invests in stocks is 1.35%. Conversely, the average expense ratio of a Vanguard S&P 500 Fund is 0.10%. The difference of 1.25% is staggering over time.
5. Miscellaneous fees. Some advisors charge $50 – $100 a year per account to open or close an account, and even fees to dollar cost average your funds into the market.
6. Transaction fees. Every time you buy or sell a fund, a fee is typically paid to a custodian. These can range from $5 to hundreds of dollars per transaction.
7. Fee Only: Paid directly by clients for their services and can’t receive other sources of compensation, such as payments from fund providers. Act as a fiduciary, meaning they are obligated to put their clients’ interests first
8. Fee Based: Paid by clients but also via other sources, such as commissions from financial products that clients purchase. Brokers and dealers (or registered representatives) are simply required to sell products that are “suitable” for their clients.
A “suitable” investment is defined by FINRA as one that fits the level of risk that an investor is willing and able, as measured by personal financial circumstances, to take on. The Financial Industry Regulatory Authority is a private American corporation that acts as a Self Regulatory Organization (SRO) that regulates member stock brokerage firms and exchange markets. These criteria must be met. It is not enough to state that an investor has a risk-friendly investment profile. In addition, they must be in a financial position to take certain chances with their money. It is also necessary for them to
A hedge fund is a limited partnership of private investors whose money is managed by professional fund managers who use a wide range of strategies; including leveraging [debt] or trading of non-traditional assets [real-estate, collectible, commodities, cyrpto-currency, etc] to earn above-average returns. Hedge funds are considered a risky alternative investment and usually require a high minimum investment or net worth. This person is known as an “accredited investor” or “Regulation D” investor by the US Securities Exchange Commission and must have the following attributes:
A net worth, combined with spouse, of over $1 million, not including primary residence
An income of over $200,000 individually, or $300,000 with a spouse, in each of the past two years
Choose the fee structure. The fee structure should align with your needs. Consider the type of advice you seek, the number of times needed and the complexity of your financial situation. You can always negotiating tactics are free to ask for a better deal.
Compare fees. It is essential to research and compare different fees. Be sure to read the fine print for details or costs that are not a base fee.
Robo-advisors: For simple investment goals, with little specificity, robo-advisors may be a cost-effective option. They charge lower fees than conventional financial advisors and provide an automated, algorithmic approach to managing your investments.
Assessment
The average cost of working with a human financial advisor in 2024 was 0.5% to 2.0% of assets managed, $200 to $400 per hourly consultation, a flat fee of $1,000 to $3,000 for a one-time service, and/or a 3% to 6% commission fee on the product types sold.
When ruminating over financial advisory fees; read and understand the contract with disclosures, do not sign a confidentiality or non-disclosure agreement, and do not waive your right to a lawsuit. According to colleague Dr. Charles F. Fenton IIII JD, forced legal settlements almost always favor the advisor over the client.
2. Marcinko, DE and Hetico, HR; Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™] Productivity Press, New York, 2017.
3. Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, NY 2006
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
If you’re looking at this tab, chances are you are fed up, burned out, seeking a better work-life balance, looking for a new non-clinical career, thinking of retirement, or all of the above. Perhaps you are just looking to regain the joy and meaning in your medical career. No worries! You may have come to the right place.
We work only with doctors, dentists, podiatrists, nurses, technicians and healthcare providers who struggle with personal and professional disillusionment, burnout, financial distress and an unbalanced life – all of which can happen at any stage of a medical career.
Through our coaching sessions, medical and healthcare professionals and colleagues can achieve a more meaningful, purposeful, and financially flourishing life.
Posted on June 5, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Health Capital Consultants, LLC
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On April 11th, 2025, the Centers for Medicare & Medicaid Services (CMS) released its proposed rules for the payment and policy updates for the Medicare inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS) for fiscal year (FY) 2026.
This Health Capital Topics article will discuss the proposed rule and the implications for stakeholders. (Read more…)
50% tariffs on steel and aluminum went into effect today. To celebrate, President Trump hopped on Truth Social to put China’s President Xi on blast ahead of an expected call between the two heads of state. And, Temu lost 58% of its daily users thanks to tariffs.
The president also pushed Jerome Powell to “LOWER THE RATE” following terrible private sector job numbers. Stocks are seemingly immune to tough trade talk and interest rate rants at this point, but bond yields sank on fears of slower economic growth.
The US dollar slipped, propelling gold higher as investors sought safety.
Posted on June 3, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Health Capital Consultants, LLC
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A recent joint report by the National Association of Accountable Care Organizations (NAACOS) and Innovaccer Inc., a healthcare artificial intelligence (AI) company, found tangible evidence that the U.S. healthcare delivery system is indeed moving toward value-based care (VBC).
Fifteen years after the passage of the Patient Protection and Affordable Care Act (ACA), which promoted VBC through the advent of ACOs and other alternative payment models, there is finally evidence that providers are actually moving in that direction.
This Health Capital Topics article reviews the joint report on “The State and Science of Value-based Care 2025.”(Read more…)
Life planning and behavioral finance as proposed for physicians and integrated by the Institute of Medical Business Advisors Inc., is unique in that it emanates from a holistic union of personal financial planning, human physiology and medical practice management, solely for the healthcare space. Unlike pure life planning, pure financial planning, or pure management theory, it is both a quantitative and qualitative “hard and soft” science, with an ambitious economic, psychological and managerial niche value proposition never before proposed and codified, while still representing an evolving philosophy. Its’ first-mover practitioners are called Certified Medical Planners™.
Financial Life Planning is an approach to financial planning that places the history, transitions, goals, and principles of the client at the center of the planning process. For the financial advisor or planner, the life of the client becomes the axis around which financial planning develops and evolves.
Financial Life Planning is about coming to the right answers by asking the right questions. This involves broadening the conversation beyond investment selection and asset management to exploring life issues as they relate to money.
Financial Life Planning is a process that helps advisors move their practice from financial transaction thinking, to life transition thinking. The first step is aimed to help clients “see” the connection between their financial lives and the challenges and opportunities inherent in each life transition.
But, for informed physicians, life planning’s quasi-professional and informal approach to the largely isolate disciplines of financial planning and medical practice management is inadequate. Today’s practice environment is incredibly complex, as compressed economic stress from HMOs managed care, financial insecurity from insurance companies, ACOs and VBC, Washington DC and Wall Street; liability fears from attorneys, criminal scrutiny from government agencies, and IT mischief from malicious electronic medical record [eMR] hackers. And economic bench marking from hospital employers; lost confidence from patients; and the Patient Protection and Affordable Care Act [PP-ACA] more than a decade ago. All promote “burnout” and converge to inspire a robust new financial planning approach for physicians and most all medical professionals.
The iMBA Inc., approach to financial planning, as championed by the Certified Medical Planner™ professional certification designation program, integrates the traditional concepts of financial life planning, with the increasing complex business concepts of medical practice management. The former topics are presented in this textbook, the later in our recent companion text: The Business of Medical Practice [Transformational Health 2.0 Skills for Doctors].
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For example, views of medical practice, personal lifestyle, investing and retirement, both what they are and how they may look in the future, are rapidly changing as the retail mentality of medicine is replaced with a wholesale and governmental philosophy. Or, how views on maximizing current practice income might be more profitably sacrificed for the potential of greater wealth upon eventual practice sale and disposition.
Or, how the ultimate fear represented by Yale University economist Robert J. Shiller, in The New Financial Order: Risk in the 21st Century, warns that the risk for choosing the wrong profession or specialty, might render physicians obsolete by technological changes, managed care systems or fiscally unsound demographics. OR, if a medical degree is even needed for future physicians?
Say, what medical license?
Dr. Shirley Svorny, chair of the economics department at California State University, Northridge, holds a PhD in economics from UCLA. She is an expert on the regulation of health care professionals who participated in health policy summits organized by Cato and the Texas Public Policy Foundation. She argues that medical licensure not only fails to protect patients from incompetent physicians, but, by raising barriers to entry, makes health care more expensive and less accessible. Institutional oversight and a sophisticated network of private accrediting and certification organizations, all motivated by the need to protect reputations and avoid legal liability, offer whatever consumer protections exist today.
Yet, the opportunity to revise the future at any age through personal re-engineering, exists for all of us, and allows a joint exploration of the meaning and purpose in life. To allow this deeper and more realistic approach, the informed transformation advisor and the doctor client, must build relationships based on trust, greater self-knowledge and true medical business management and personal financial planning acumen.
[A] The iMBA Philosophy
As you read this ME-P website, we hope you will embrace the opportunity to receive the focused and best thinking of some very smart people. Hopefully, along the way you will self-saturate with concrete information that proves valuable in your own medical practice and personal money journey. Maybe, you will even learn something that is so valuable and so powerful, that future reflection will reveal it to be of critical importance to your life. The contributing authors certainly hope so.
At the Institute of Medical Business Advisors, and thru the Certified Medical Planner™ program, we suggest that such an epiphany can be realized only if you have extraordinary clarity regarding your personal, economic and [financial advisory or medical] practice goals, your money, and your relationship with it. Money is, after only, no more or less than what we make of it.
Ultimately, your relationship with it, and to others, is the most important component of how well it will serve you.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com
Posted on May 28, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Rick Kahler MSFP CFP®
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OVER HEARD IN THE FINANCIAl ADVISOR’S LOUNGE
A basic strategy for asset protection is to hold various assets in different entities. Putting real estate, small businesses, and other assets into trusts, corporations, or limited liability companies (LLCs) is effective protection that is relatively easy to put into practice. Not only do I recommend this strategy to clients, I use it myself. Recently, however, I discovered a potential downside.
About 25 years ago, I invested in some rare coins in a corporation I owned and put them into a safe deposit box owned by the corporation. When my business relocated 12 years ago, the safe deposit box billing was not forwarded to the new address and was never paid again. Last year I went to retrieve the coins from the safe deposit box, which I had not visited in 25 years. I discovered the box had been drilled open three years earlier and my collection turned over to the unclaimed property division of the State Treasurer’s office.
I was told getting the coins back would be simple enough. I just needed to verify that I owned the company which owned them by providing the corporation’s tax ID number. However, the corporation no longer existed. I didn’t have a record of its tax ID number. The IRS wouldn’t verify the number without my giving them the address the company had used. That address was a post office box number that I no longer used and couldn’t remember. The state’s position was “no tax ID, no coins.” The only verification of my identity as owner of the corporation was my signature on the bank’s safe deposit box application. Eventually, with the support of bank officers who were willing to swear that I was who I claimed to be, I got my coin collection back. The hassle involved in this process was a reminder of an important component of asset protection. Maintain accurate records so you don’t end up hiding assets from yourself.
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A good start is to create a master file of all the entities that hold your assets. This can be any system that’s easy for you to use: a computer spreadsheet, a set of file folders, or a single paper list. Share it as appropriate with your CPA, attorney, or financial planner. The master list should include the name of each company, its date of incorporation, tax ID number, address, and other relevant information like phone or bank account numbers. Also keep an inventory of the assets each company owns.
Once you’ve created a master list, it’s essential to keep it up to date as you buy or sell assets, close companies, or transfer ownership. Set up a system, as well, to remind yourself of tasks like filing tax returns, completing minutes of annual meetings, and paying the annual safe deposit box rent. Make your record-keeping easier by eliminating unnecessary complications.
For example, you probably don’t need a separate address for each trust, corporation, or LLC. Instead of creating a separate company for each asset, you might consider grouping smaller assets within one entity. I’d suggest first discussing the pros and cons with an attorney or financial planner. For larger assets like real estate, I do recommend holding each one separately.
When I talk to clients about asset protection, I mention that part of the price we pay for it is an increase in paperwork. It’s easy to accept that idea with casual good intentions. The case of my reclaimed coin investment is a good reminder of the importance of keeping up with that paperwork. If we don’t, we might protect ourselves right out of access to our own assets.
Posted on May 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
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Stock markets are coming off their worst week since April as President Trump’s tariff threats on Europe and Apple revived trade war jitters. The president has since delayed tariff threats on the EU, giving European stocks a boost yesterday, while Wall Street had the day off for Memorial Day.
No such relief appears to be coming for Apple, which has fallen 8% so far this month, and is the only Magnificent Seven member in the red for May, per FactSet.
Most individual physician portfolios are simply a list of stocks. Doctors with such lists usually know the cost of each position and when they acquired it. It is not unusual to find inherited low cost stocks in the account that have been held for many years.
When you inherit securities, a new cost basis is established (the price of the stock on the date of death or six months later—the executor of the estate makes this determination). Even though there would be no capital gain liability if the stock were sold immediately after date of death, most people simply don’t do anything, just hold the stock. Of course taxes should be considered when selling securities but the investment merit should be the overriding factor.
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Doctor and Accountant Opinions
In a personal communication, Mr. L. Eddie Dutton, CPA said, “First make an investment decision and if it fits into the tax plan, so much the better. Doctors often wonder where they will get the money to pay the taxes. I say to get it from the sale of the appreciated stock and cry all the way to the bank with your profit.”
Dr. Ernest Duty MD, a very successful private investor advises “Ask yourself this question: If you had the money instead of the stock, would you buy the stock? If your answer is ‘Yes’ then, hold on to the stock but if you say ‘No, I wouldn’t buy that stock today’ then, sell it” [personal communication].
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: E-MAILCONTACT: MarcinkoAdvisors@outlook.com
When New York-based Zocdoc was founded back in 2007, the idea was to help patients get off the phone, founder and CEO Oliver Kharraz told Healthcare Brew. The company created a website that helps patients find clinicians who fit their needs in their area and are under their insurance, and books appointments online.
But on May 1st, Zocdoc launched a new product to get people back on the phone: an artificial intelligence (AI) voice agent called Zo. Zo helps people book doctor appointments 24/7—but instead of speaking with a person, patients speak with an AI voice that is trained to meet their needs.
“Until recently, we didn’t do the phone because the experience on the phone was just so miserable,” Kharraz said. “Now you can actually have a consistent experience, where the AI can pick up after the first ring an unlimited number of times concurrently [and] have a natural conversation with you.”
A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. These managers use a wide range of strategies, including leverage (borrowed money) and the trading of nontraditional assets, to earn above-average investment returns. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.
I want to invest with a manager that has the skills to “hedge” a portfolio, but I do not wish to mix my money with other investors as in a hedge fund.
QUESTION:Can I hire hedge fund managers to manage my account separately?
Some hedge fund managers do take the time to recruit and manage separate accounts, with or without the help of referring brokers.
However, before long the administrative burden of managing so many separate accounts can become quite significant. Hence, the minimums for such separate accounts are generally much higher than if one were to invest in the manager’s hedge fund.
The best feature of these separate accounts is that potentially every aspect of the investment account, including fees, is negotiable. Other features include greater transparency and increased liquidity, since separately managed accounts can often be shut down on short notice.
Investors must be aware, however, that for practical purposes the portfolio manager generally will buy and sell the same securities in the separately managed accounts that the portfolio manager buys and sells in the hedge fund, yet the expenses incurred by the investor will likely be higher.
Posted on May 20, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Coinbase under investigation – Hit with ransom attack
Coinbase’s wild week got much wilder when the New York Times reported that the SEC has been looking into whether the crypto exchange misstated the size of its user base in securities filings. Per the New York Times, the investigation started under President Biden and has continued under President Trump.
The subject of the investigation appears to be Coinbase’s claim in past disclosures and marketing materials that it has 100 million “verified users.” A company spokesperson said it no longer reports that metric and the investigation should not continue.
The report came days after Coinbase joined the S&P 500, and just hours after it said it could lose $400 million following a recent hack by “rogue overseas” agents looking to steal customer data.
Financial Advisors and Financial Planners Usually Aren’t Millionaires
According to the most recent data from the Bureau of Labor Statistics (BLS), financial advisors had a median annual salary of $99,580 in 2023, which is significantly higher than the national average of $65,470. Of course, salaries of financial advisors can differ significantly by their location and level of expertise. The client’s profile may also have an impact on their compensation. But, many are not rich.
This is unfortunate. Financial advisors and Financial planners don’t rank among the millionaire professions in Thomas J. Stanley and William D. Danko’s book The Millionaire Next Door. Many work as salaried employees rather than entrepreneurs, lacking the scalable income potential of business owners who reinvest profits.
Stanley and Danko also stressed frugality, a challenge for advisors pressured to flaunt success—think luxury cars or upscale offices—making them “income-statement affluent” rather than “balance-sheet affluent.”
The truth is that a Financial Advisors’ success isn’t measured in client returns. Instead it is measured in their ability to gather assets and retain clients. In other words; Financial Advisors do not need to be good with money.
Financial Advisors need to be good with marketing, advertising, sales and people.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. These managers use a wide range of strategies, including leverage (borrowed money) and the trading of nontraditional assets, to earn above-average investment returns. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.
My medical practice has a small self-directed pension plan with profit sharing features.
QUESTION: Can my medical practice’s retirement plan invest in a hedge fund?
Such a pension fund falls under a category called self-directed “plan” assets.
Among the rules are that each participant in the plan counts toward the 100 investor maximum under which most hedge funds operate, that each plan participant be a fully accredited investor, and that the hedge fund keep investments such as pension plans and other funds covered under ERISA to less than 25 percent of total assets under management.
Cognitive science is the interdisciplinary study of the mind and cognition. According to linguistics Professor Mackenzie H. Marcinko PhD, it combines various aspects from neuroscience, computer science, psychology, philosophy, linguistics, anthropology, and other fields, into a comprehensive study on the nature of intelligence.
Linguistics is the scientific study of language and its structure, including the study of morphology, syntax, phonetics, and semantics. Specific branches of linguistics include sociolinguistics, dialectology, psycholinguistics, computational linguistics, historical-comparative linguistics and applied linguistics.
Now, language and linguistics are closely related fields of study but they have distinct focuses.
Language refers to the system of communication used by humans, encompassing spoken, written, and signed forms. It is a means of expressing thoughts, ideas, and emotions.
On the other hand, linguistics is the scientific study of language itself. It examines the structure, sounds, meaning, and evolution of languages, as well as how they are acquired and used by individuals and communities.
While language is a broader concept that encompasses various forms of communication, linguistics delves into the intricate details and mechanics of language, aiming to understand its underlying principles and patterns.
Posted on May 16, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Oak Street Health, headquartered in Chicago and a wholly-owned subsidiary of CVS Health since 2023, has agreed to pay $60 million to resolve allegations that it violated the False Claims Act by paying kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street Health’s primary care clinics.
The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of patients or to provide recommendations of items or services covered by Medicare, Medicaid and other federally funded programs. Under the Medicare Advantage (MA) Program, also known as Part C, Medicare beneficiaries have the option to obtain their health care through privately-operated insurance plans known as MA plans. Some MA Plans contract with health care providers, including Oak Street Health, to provide their plan members with primary care services.
The United States alleged that, in 2020, Oak Street Health developed a program to increase patient membership called the Client Awareness Program. Under the Program, third-party insurance agents contacted seniors eligible for or enrolled in Medicare Advantage and delivered marketing messages designed to generate interest in Oak Street Health. Agents then referred interested seniors to an Oak Street Health employee via a three-way phone call, otherwise known as a “warm transfer,” and/or an electronic submission.
In exchange, Oak Street Health paid agents typically $200 per beneficiary referred or recommended. These payments incentivized agents to base their referrals and recommendations on the financial motivations of Oak Street Health rather than the best interests of seniors. The settlement resolves allegations that, from September 2020 through December 2022, Oak Street Health knowingly submitted, and caused the submission of, false claims to Medicare arising from kickbacks to agents that violated the Anti-Kickback Statute.
Posted on May 12, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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I’ve received emails from readers asking my thoughts on DeepSeek. I need to start with two warnings. First, the usual one: I’m a generalist value investor, not a technology specialist (last week I was analyzing a bank and an oil company), so my knowledge of AI models is superficial. Second, and more unusually, we don’t have all the facts yet.
But this story could represent a major step change in both AI and geopolitics.
Here’s what we know:
DeepSeek—a year-old startup in China that spun out of a hedge fund—has built a fully functioning large language model (LLM) that performs on par with the latest AI models. This part of the story has been verified by the industry: DeepSeek has been tested and compared to other top LLMs. I’ve personally been playing with DeepSeek over the last few days, and the results it spit out were very similar to those produced by ChatGPT and Perplexity—only faster.
This alone is impressive, especially considering that just six months ago, Eric Schmidt (former Google CEO, and certainly no generalist) suggested China was two to three years behind the U.S. in AI.
But here’s the truly shocking—and unverified—part: DeepSeek claims they trained their model for only $5.6 million, while U.S. counterparts have reportedly spent hundreds of millions or even billions of dollars. That’s 20 to 200 times less.
The implications, if true, are stunning. Despite the U.S. government’s export controls on AI chips to China, DeepSeek allegedly trained its LLM on older-generation chips, using a small fraction of the computing power and electricity that its Western competitors have. While everyone assumed that AI’s future lay in faster, better chips—where the only real choice is Nvidia or Nvidia—this previously unknown company has achieved near parity with its American counterparts swimming in cash and datacenters full of the latest Nvidia chips. DeepSeek (allegedly) had huge compute constraints and thus had to use different logic, becoming more efficient with subpar hardware to achieve a similar result.
In other words, this scrappy startup, in its quest to create a better AI “brain,” used brains where everyone else was focusing on brawn—it literally taught AI how to reason.
Posted on May 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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I am back from what has become over the past two decades an annual pilgrimage to Omaha.
What’s fascinating about this trip is that it has everything and nothing to do with Warren Buffett. The main event that draws everyone to Omaha – the Berkshire Hathaway (BRK) annual meeting – is actually the least important part. I could have watched the shareholder meeting livestreamed on YouTube from the comfort of my living room couch.
The emergence of the Berkshire phenomenon reminds me of China’s manufacturing evolution. China initially attracted capital because of its cheap labor. But over time, China took this capital and plowed it into infrastructure. Factories were built next to each other, each specializing in certain areas. A specialized ecosystem emerged.
Today, Chinese labor is no longer cheap. It’s been replaced by automation, and now China is a powerhouse for manufacturing anything and everything.
The transformation that the BRK weekend has undergone followed a similar progression. Initially, the only way to absorb Buffett and Munger’s wisdom was to come to Omaha, as the event was not streamed. But then something interesting happened. The BRK weekend attracted people who shared the same value system, and friendships were formed. A variety of smaller events began to be scheduled throughout the same weekend across Omaha, and an equally specialized ecosystem emerged.
The shareholder meeting began to be streamed about ten years ago, but that has had no impact on attendance. This is one reason why I think Buffett is at peace with the idea of no longer presiding at the meeting – people will still come to Omaha the weekend before Mother’s Day. The BRK weekend now features dozens of excellent events.
I spoke at several, including an investing panel at Creighton University, alongside the wonderful Bob Robotti, a die-hard value investor who runs Robotti & Co. I’ve known Bob for years – at 72, he exhibits the same enthusiasm for stocks as someone decades younger – and this panel was an excellent example of what the BRK Omaha ecosystem has produced.
Bob and I have very different approaches to value investing. He loves cyclical businesses, while I generally shun them. Bob mentioned that he’d buy a very cheap business run by a mediocre manager, while I would not touch it with a ten-foot pole.
There is absolutely nothing wrong with either approach; indeed, there is an important lesson in it. Your investment philosophy and process have to fit your personality and your EQ. In my case, I get nervous (and thus irrational) when I own companies run by imbeciles who don’t have either skin or soul in the game. But the great thing about the BRK weekend is that I learn from Bob every time I spend time with him. He’s a thoughtful and genuinely kind human being.
From the outside, the BRK weekend may seem like a place where people simply want to learn how to get and stay rich. But this gathering transcends value investing and capitalism and genuinely celebrates human values. People (like me) bring their kids to this event. And just like at the main event, at the Q&A breakfast I hosted for my readers, many questions centered on life rather than investing.
My first Omaha reader meetup fit around a small restaurant table. This year, to my surprise, 450 people packed into a venue with standing-room only. I answered questions on every imaginable topic for just over two hours, and by the end I was exhausted.
This gave me even greater admiration for Buffett, who is four decades my senior, yet still fielded questions for four solid hours. I was delighted to hear Warren give a similar answer to one I had given the day before when asked what advice he’d give to graduating students: “Don’t worry too much about starting salaries and be very careful who you work for because you will take on the habits of the people around you.”
(Incidentally, we are going to host our next Q&A Breakfast on May 1, 2026. You can sign up for it here. It’s free, but I suggest you sign up early, as it fills up fast.)
I also participated (as I have for over a decade) in an investing panel at YPO (Young President Organization) in the beautiful Holland Performance Art Center with Tom Gaynor, CEO of Markel (often described as a baby Berkshire Hathaway) and Lawrence Cunningham. Lawrence authored perhaps the most important book about Buffett, The Essays of Warren Buffett, masterfully editing Warren’s annual letters into a cohesive volume. This year’s panel was one of those occasions where I found myself listening intently to my fellow panelists instead of speaking more.
Lawrence has met Greg Abel – Buffett’s designated successor – and feels optimistic about him. He’s probably right – this was one of Buffett’s most crucial decisions, which he did not make lightly. Yet I can’t imagine sitting for four hours listening to Greg Abel. I am sure he is a brilliant CEO, but he’s neither Buffett nor Munger – few individuals possess so much worldly wisdom and communicate it with such clarity and humor.
This brings me to the point of this note: the dramatic (yet not unexpected) announcement that Buffett is stepping down as CEO of BRK at the end of the year.
Before I comment on this, let me tell you a story. Imagine you have been watching a soap opera for 17 years. You arrive dutifully every year to watch every episode in person. And then you miss the last five minutes of the explosive finale before it goes off the air. This is what happened to me when Buffett announced his retirement as CEO.
A few minutes before noon, while Buffett was answering a question I’d heard before and appeared to be winding down, I suggested we slip out early for lunch to avoid the crowds. When we came back, I discovered that the meeting had gone on until 1 pm, and just before it ended, Buffett announced that he would step down at the end of the year. Seventeen years of watching Warren speak and I missed the most dramatic moment of all, followed by a five-minute standing ovation.
I think Buffett has engineered his exit brilliantly. He will still remain chairman, and even before the announcement he was not managing BRK’s day-to-day operations. As a collection of hundreds of companies that often have absolutely nothing in common with each other, BRK is already highly decentralized. Buffett’s main contribution has been capital allocation.
Giving up the CEO title while he’s still alive means Buffett has brought in his replacement in an orderly way and created a smooth transition. But I have a feeling that on January 1, 2026, when Greg Abel officially becomes CEO, nothing will really change, and Warren will continue doing what he’s been doing for as long as he can. If Buffett is able – he’ll be 95 – he’ll still drive to the office and stop by McDonald’s for a breakfast sandwich (there’s a lot of wisdom in finding pleasure in little things). His son Howard Buffett will become chairman after Warren, with his only job being to preserve the culture. I’ve been asked what I think of BRK stock. We bought the stock during the pandemic. It has done better than I expected, in part because of the strong performance of Apple, which was BRK’s largest holding. But BRK today is an unexciting investment at its current price. In all honesty, it is a conglomerate with some good and some merely okay businesses.
As a consumer, I get a (small) glimpse into how BRK businesses are being run by visiting Dairy Queen. BRK owns DQ, and I love their soft-serve ice cream (though I only eat it when I travel). My favorite part of research!
DQ has (or maybe had) a strong brand and operates on a capital-light model as a franchisor. But most stores I have visited looked like they have been neglected and need fresh paint. To be sure, I understand the limitations of this “analysis,” and DQ overall amounts to a rounding error on BRK’s financials. But little things often reveal much about big things.
BRK’s big businesses, from what I can glean through their financials, are not particularly well managed – GEICO and BNSF (railroad) have definitely been undermanaged lately. BNSF is not nearly as efficient as its competitors that embraced precision railroading, and until recently GEICO was losing market share to Progressive.
BRK’s reinsurance business, a significant source of BRK’s profitability, is run by the extraordinary Ajit Jain. Ajit is in his 70s and unfortunately it seems he is not in great health. Is his replacement going to shoot the lights out, like he did? We don’t know. But Ajit is probably more important to BRK today than Buffett.
BRK is not going to melt into oblivion after Buffett is gone, but its best days are behind it. As Buffett has acknowledged, just its size alone makes it very difficult for BRK to grow. Truth be told, even if Buffett were thirty years younger and continued to run BRK, I am not sure the results would be much different than what I think the future holds with Abel at the helm.
Buffett and Charlie Munger had a tremendous impact on me as an investor and human being. I am incredibly thankful to both. I hope Warren is there next year, but, in either case, I will be.
Every year on May 10th, the world comes together to observe World Lupus Day.
Lupus is a disease that occurs when your body’s immune system attacks your own tissues and organs (autoimmune disease). Inflammation caused by lupus can affect many different body systems — including your joints, skin, kidneys, blood cells, brain, heart and lungs. Lupus can be difficult to diagnose because its signs and symptoms often mimic those of other ailments. The most distinctive sign of lupus — a facial rash that resembles the wings of a butterfly unfolding across both cheeks — occurs in many but not all cases of lupus. Some people are born with a tendency toward developing lupus, which may be triggered by infections, certain drugs or even sunlight. While there’s no cure for lupus, treatments can help control symptoms.
In 2025, this important day continues its mission of raising awareness about lupus, supporting those affected, and promoting further research into this complex autoimmune condition.
Financial Advisor, Planner and Insurance Agent Information
By Staff Reporters
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Ostrich Bias is a behavioral phenomenon describing the tendency of individuals to avoid or ignore information that they perceive as negative or threatening. This term is derived from the popular but inaccurate belief that ostriches bury their heads in the sand when faced with danger, even though they do not exhibit such behavior.
Evidence: There is neuro-scientific evidence of the ostrich effect. Sharot et al. (2012) investigated the differences in positive and negative information when updating existing beliefs. Consistent with the ostrich effect, participants presented with negative information were more likely to avoid updating their beliefs; wills, estate plans, investment portfolios, and insurance policies, etc..
Moreover, they found that the part of the brain responsible for this cognitive bias was the left IFG – inferior frontal gyrus – by disrupting this part of the brain with TMS – transcranial magnetic stimulation – participants were more likely to accept the negative information provided.
EXAMPLE: The Ostrich Bias can cause someone to avoid looking at their bills, because they’re worried about seeing how far behind they are on home mortgage payments, credit cards, education or auto loans, etc.
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Posted on May 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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Today, we’re diving into two thought-provoking questions:
What’s a famous investment rule I don’t agree with? Which key characteristics should a good investor have? Again:
What’s a famous investment rule I don’t agree with?
Which key characteristics should a good investor have?
A Famous Investment Rule I Don’t Agree With: “Buy and Hold”
Buy and hold becomes a religion during bull markets. Then, holding a stock because you bought it is often rewarded through higher and higher valuations. There’s a Pavlovian bull market reinforcement – every time you don’t sell (hold) a stock, it goes higher.
Buying is a decision. So is holding, but it should not be a religion but a decision. The value of any company is the present value of its cash flows. When the present value of cash flows (per share) is less than the price of the stock, the stock should not be “held” but sold.
WarrenBuffett is looked upon as the deity of buy and hold.
Look at Coca Cola when it hit $40 in 1999. Its earnings power at the time was about $0.80. It was trading at 50 times earnings. It was significantly overvalued, considering that most of the growth for this company was in the past.
Fast-forward almost a quarter of a century – literally a generation. Today the stock is at $60. It took more than a decade to reclaim its 1999 high. Today, Coke’s earnings power is around $1.50–1.90. Earnings have stagnated for over a decade. If you did not sell the stock in 1999, you collected some dividends, not a lot but some. The stock is still trading at 30–40x earnings. Unless they discover that Coke cures diabetes (not causes it), its earnings will not move much. It’s a mature business with significant health headwinds against it.
“Long-term” and “buy-and-hold” investing are often confused.
People should not own stocks unless they have a long-term time horizon. Long-term investing is an attitude, an analytical approach. When you build a discounted cash flow model, you are looking decades ahead. However, this doesn’t mean that you should stop analyzing the company’s valuation and fundamentals after you buy the stock, as they may change and affect your expected return. After you put in a lot of analytical work and buy the stock, you should not simply switch off your brain and become a mindless buy-and-hold investor.
This doesn’t mean you shouldn’t be patient, but holding, not selling, a stock is a decision.
Posted on May 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Rick Kahler CFP™ MSFP
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DECLINE OF THE DOLLAR
On-again, off-again tariffs. Rising prices. Dramatic market swings. The anxiety-producing headlines come so fast it’s hard to know what to worry about first. Meanwhile, one serious consequence of all this chaos is going almost unnoticed. That is the decline of the dollar.
Since the start of this year, the value of the U.S. dollar has slipped more than 10% against other major currencies. That drop is not just an economic statistic. It affects all Americans’ daily lives.
People are feeling the pinch of rising prices at checkout lines, gas stations, and shipping counters. But there isn’t a full understanding of why. Tariffs are only half the story. The weakening dollar amplifies those price increases even further.
For years, the dollar remained strong even as the national debt ballooned. It benefited from its reputation as a safe haven, from global demand, and from U.S. interest rates. But much of that strength, as we now see, was fragile—propped up more by perception than fundamentals. In April, sweeping tariffs triggered a sharp market correction, and the dollar suddenly fell to its lowest point in over three years. Market confidence vanished overnight.
This was more than a market reaction. It signaled a collapse in trust—not just in policy, but in principle. It is no longer a given that the U.S. will act with consistency, reason, and long-term responsibility. What’s unraveling is both our country’s financial credibility and the moral foundation that underpinned it.
When a currency represents a nation, its value reflects more than economics. It reflects governance, accountability, stability, and integrity. When the dollar stumbles, it speaks to who we are, and whether we can still be counted on.
Yet, most people aren’t talking about the decline of the dollar. This may come from being overwhelmed, choosing to ignore even more bad news, or actually believing that this is a necessary step in making things better. It is not.
We all respond differently to financial uncertainty. Some lean into hyper-vigilance—tightening budgets, tracking every headline. Others shut down, turning toward distraction. Still others press on as if nothing has changed. These are all natural human reactions.
They are not the same as leadership. And leadership—internal and external—is what’s needed now. Not panic. Not blame. Just the courage to face where we are and the willingness to start again from there.
But leadership is in short supply in Washington, where many in both parties remain silent. Some fear political retribution from the administration, others fear backlash from increasingly extreme and vocal constituencies. That silence costs us all.
A respected government official recently told me that, while some of the domestic damage to our economy could be repaired within a few years, rebuilding global confidence in the United States may take a generation. That is a reflection of the rapid erosion of trust that has already happened in the last three months. Trust that took decades to build has been unwound in a matter of weeks. Even if we reversed every policy decision tomorrow, the damage is done.
We cannot change what’s already happened. We can still choose to show up. To pay attention. To have the hard conversations. To lead our own financial lives with more clarity, integrity, and intention than before. That kind of personal leadership may not fix the dollar. But it can help rebuild what underlies its value: trust, steadiness, and the moral grounding we’ve begun to lose.
Because the dollar’s decline is more than an economic headline.
It’s a story about who we are—and whether we’re ready to live with open eyes in a world where the old assumptions no longer hold.
Posted on May 6, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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The technology at the core of the mania is different every time. What doesn’t change over time is human emotion – the fear of missing out and then the fear of loss.
AI has a feel of “this time is different.” Optimism rarely erupts about the same technology twice; this is why history doesn’t repeat but rhymes. The technology at the core of the mania is different every time. What doesn’t change over time is human emotion – the fear of missing out and then the fear of loss, in that order.
Humans are an optimistic bunch. We need it; it’s essential to our survival and progress; but eventually, we take our optimism too far. The graveyard of financial ruins is full of these stories.
I have beat the dotcoms and Nifty Fifties to death, so let’s go to back another century. My friend the brilliant Edward Chancellor wrote about the railroad boom and bust in England in the 1800s. Here he is, edited for brevity:
The first railway to use steam locomotives opened in 1825 and was designed to carry coal, not passengers. Railway promoters simply did not appreciate the potential demand for high-speed travel. The successful launch of the Liverpool and Manchester Railway in 1830, however, demonstrated the commercial viability of passenger travel. By the early 1840s, Britain’s railway network stretched to more than 2,000 miles. Railway companies were delivering acceptable, if not spectacular, returns for investors.
Then railway fever suddenly gripped the nation. Enthusiasts touted rail transport not just for its economic benefits, but for its benign effects on human civilization. One journal envisaged a day when the “whole world will have become one great family speaking one language, governed in unity by like laws, and adoring one God.” In the two years after 1843, the index of rail stocks doubled.
Investment peaked at around 7% of Britain’s national income. Railway enthusiasts predicted that rail would soon replace all the country’s roads and that “horse and foot transit shall be nearly extinct.”
In 1845, Britain’s railways carried nearly 34 million passengers. If the 8,000 miles of newly authorized railways were to deliver their expected 10% return, then the industry’s total revenue and passenger traffic would have to climb five fold or more – all within the space of just five years. “This should have alarmed observers by itself … But they were deluded by the collective psychology of the Mania”, writes Odlyzko.
In 1847 a severe financial crisis broke out, induced in part by the diversion of large amounts of capital into unprofitable railway schemes. It turned out that the revenue projections provided by so-called “traffic takers” were wildly overoptimistic. Railway engineers underestimated costs. The vogue for constructing direct lines between large urban centers proved mistaken, as most traffic turned out to be local. As a result, Britain’s rail network was plagued with overcapacity. By the end of the decade, the index of railway stocks was down 65% from its 1845 peak.
The railroad bubble in England is just one example; there are hundreds of similar stories across market history. They all share this theme:
A new technology appears on the horizon. In the early stages, investment is rational, but then at some point excitement, imagination, and optimism take over, leading to overinvestment (usually creating a financial bubble). Investors make a lot of money until most lose it all. When the dust settles, only a few companies survive.
This AI boom reminds me of the telecom sector in the 1990s. The internet was going to change the world, and it did, but first we had tremendous overcapacity in global fiber and telecom equipment.
One could say that telecommunications companies overestimated demand for broadband and underestimated changes in technology, and that would be true. But there was a more nuanced dynamic at play, what economists call the fallacy of composition.
What’s true for one participant isn’t necessarily true for the group.
Posted on May 5, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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“Any time you make a bet with the best of it, where the odds are in your favor, you have earned something on that bet, whether you actually win or lose the bet. By the same token, when you make a bet with the worst of it, where the odds are not in your favor, you have lost something, whether you actually win or lose the bet.”
– David Sklansky, The Theory of Poker
Over a lifetime, active investors will make hundreds, often thousands of investment decisions. Not all of those decisions will work out for the better. Some will lose and some will make us money. As humans we tend to focus on the outcome of the decision rather than on the process.
On a behavioral level, this makes sense. The outcome is binary to us – good or bad, we can observe with ease. But the process is more complex and is often hidden from us.
One of two things (sometimes a bit of both) can unite great investors: process and randomness (luck). Unfortunately, there is not much we can learn from randomness, as it has no predictive power. But the process we should study and learn from. To be a successful investor, all you need is a successful process and the ability (or mental strength) to stick to it.
Several years ago, I was on a business trip. I had some time to kill so I went to a casino to play blackjack. Aware that the odds were stacked against me, I set a $40 limit on how much I was willing to lose in the game.
I figured a couple hours of entertainment, plus the free drinks provided by the casino, were worth it. I was never a big gambler (as I never won much). However, several days before the trip I had picked up a book on blackjack on the deep discount rack in a local bookstore. All the dos and don’ts from the book were still fresh in my head. I figured if I played my cards right I would minimize the house advantage from 2-3 per cent to 0.5 per cent.
Wanting to get as much mileage out of my $40 as possible, I found a table with the smallest minimum bet requirement. My thinking was that the smaller the hands I played, the more time it would take for the casino’s advantage to catch up with me and take my money.
I joined a table that was dominated by a rowdy, half-drunken blue-collar worker who told me several times that it was his payday (literally: he was holding a stack of $100 bills in his hand) and that he was winning. I played by the book. But it did not matter. Luck was not on my side and my $40 was thinning with every hand.
Meanwhile, the rowdy guy was making every wrong move. He would ask for an extra card when he had a hard 18 while the dealer showed 6. The next card he drew would be a 3, giving him 21. Then the dealer would get a 10 and then a 2 (on top of the 6 that already showed), leaving him with 18. The rowdy guy barely paid attention to the cards.
Posted on May 4, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Health Capital Consultants LLC
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During the first 90 days of the Republican Party’s government trifecta (controlling the White House, Senate, and House of Representatives), both the Trump Administration and Congress have laid the groundwork for seismic change to the U.S. healthcare industry.
In an attempt to track the latest actions of the federal government’s legislative and executive branches affecting the healthcare industry since the first installment in our February issue, this Health Capital Topics article summarizes recent events in Washington and the impact of these changes on providers and patients. (Read more…)
Posted on May 1, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Health Capital Consultants LLC
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While the healthcare industry has been dealing with high employee turnover since the start of the COVID-19 pandemic, that turnover was largely among clinical staff.
However, a recent survey found that significant healthcare leadership turnover may also be on the horizon. AMN Healthcare subsidiary B.E. Smith found that nearly half of healthcare executives plan to leave their organization in the next year.
This Health Capital Topics article reviews the survey and the reasons behind the intended exits. (Read more…)
Posted on April 30, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
FUNDAMENTAL INDUSTRY CHANGES
By Staff Reporters
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Index Funds
An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy.
Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all (or a representative sample) of the stocks or bonds in the index it tracks.
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Quantum Computing
Unlike traditional computers that use bits, quantum computers utilize qubits. These qubits are capable of being in a state of superposition, where they can represent both 0 and 1 simultaneously, enabling the processing of multiple calculations at once. This could allow quantum computers to outperform classical computers in solving certain complex problems. However, the field is still overcoming challenges such as qubit stability and decoherence; especially in these three areas:
Quantum computing could fundamentally alter healthcare by accelerating drug discovery and improving individualized medicine. Rapid analysis of enormous volumes of biological data allows quantum computers to find trends that might guide the creation of more potent treatments. In addition to accelerating drug development, this will enable customized treatments tailored to unique genetic profiles.
Faster and more accurate financial models produced by quantum computing will transform the banking sector. Through real-time analysis of intricate financial systems, it can help investors to control risk and make better decisions. More precise market forecasts will help maximize portfolio management and trading strategies.
Through greatly enhanced medical diagnosis and patient care, quantum computing can transform the healthcare industry. Quantum computers can remarkably accurately find trends and possible health hazards by analyzing enormous volumes of medical data in a fraction of the time. Early diagnosis and more customized treatment alternatives follow from this.
B–QTUM Index Fund
Index Description: The BlueStar® Machine Learning and Quantum Computing Index (BQTUM) tracks liquid companies in the global quantum computing and machine learning industries, including products and services related to quantum computing or machine learning, such as the development or use of quantum computers or computing chips, superconducting materials, applications built on quantum computers, embedded artificial intelligence chips, or software specializing in the perception, collection, visualization, or management of big data.
Posted on April 29, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Rick Kahler CFP™
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Lately, I’ve been hearing the same question from clients and readers alike: “Is Social Security even going to be there in five years?” Fueling this concern is a recent viral comment from Elon Musk, who told Joe Rogan that Social Security is “the biggest Ponzi scheme of all time.” That quote has been repeated in every corner of the internet, stirring up uncertainty and fear.
Elon Musk is a genius, but his brilliance in technology and innovation doesn’t automatically translate into expertise in public policy. When it comes to Social Security, he’s outside his lane. Calling it a Ponzi scheme may make for a great soundbite, but it’s a fundamental mischaracterization.
Social Security is not a Ponzi scheme. Not even close.
A Ponzi scheme is a form of financial fraud that lures investors with the promise of high returns. Instead of earning those returns through legitimate investments, the scheme pays earlier investors using money from newer ones. Eventually, the model collapses when there aren’t enough new participants to keep it going, leaving most people with significant losses. This is what happened to those who trusted Bernie Madoff, operator of one of the worst Ponzi schemes in history. Ponzi schemes are illegal, deceptive, and doomed from the start.
Social Security, in contrast, is a government-run, pay-as-you-go tax program. It’s fully transparent; you know exactly where your money is going. The payroll taxes you and your employer pay are used to provide income to today’s retirees, people with disabilities, and surviving family members of deceased workers. This isn’t a con, it’s a social contract.
So why the confusion? Part of the issue is that Social Security does, on the surface, resemble the flow of a Ponzi scheme: money coming in from the young to support the old. But similarity in structure doesn’t make it fraudulent. The program does not promise high returns, it promises a modest, inflation-adjusted benefit to support people as they age.
Social Security does face challenges. The trust fund reserves, built up during years when payroll taxes exceeded payouts, are projected to run dry around 2033. If Congress does nothing, benefits will need to be cut by about 20%. That’s serious, but it’s a solvency issue, not a scam.
And the solvency issue is fixable. There are numerous bipartisan proposals to shore up the system for the long term, from raising the payroll tax cap to gradually adjusting benefits. These aren’t radical ideas, they’re common-sense repairs. A bipartisan mix of 100 CFPs in a room could work out a solution in two days.
When clients ask me if the system will be around in five years, what they’re really asking is: Can I trust it? Can I trust the government? Can I trust that my years of work and tax payments will mean something in retirement? These are not just policy questions. They are emotional questions based on fear of scarcity and a desire for security. When someone with Elon Musk’s influence wrongly calls Social Security a Ponzi scheme, his attention-grabbing soundbite shakes the emotional foundation of that trust.
If we’re serious about preserving Social Security, let’s start by calling it what it is: a commitment to our elders. A tax-supported promise to care for one another across generations.
Social Security is not a fraud, it’s a shared responsibility based on the kind of society we want and woven into the fabric of American life. Yes, it needs some adjustments, but it’s not broken. Rather than eroding public trust with misleading comparisons, we should be focused on debating public policy and how we can strengthen and sustain the program for future generations.
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ME-P NOTE: An increase in Social Security benefits is on the horizon, providing a potential financial cushion against rising inflation. The Cost of Living Adjustment (COLA) for 2025 is set at 2.5% monthly, translating to an average annual increase of approximately $600 for beneficiaries. This adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. While not guaranteed annually, COLA has historically been implemented in most years due to persistent inflationary trends.
Posted on April 28, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Health Capital Consultants LLC
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On April 7, 2025, the Centers for Medicare & Medicaid Services (CMS) published their 2026 Rate Announcement for Medicare Advantage (MA) and Medicare Part D Prescription Drug Plans.
For 2026, the payment rate to MA plans will increase 5.06%, the largest increase in the past ten years, and up significantly from the 2.2% rate increase proposed by the Biden Administration.
This Health Capital Topics article will review the Rate Announcement.(Read more…)
Posted on April 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Rick Kahler CFP™
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On January 21, 1980, in what I thought was a brilliant financial move, I bought gold. At what was then an all-time high of $873 an ounce.
Fast forward 45 years, and here we are again. Gold is on a tear, priced just over $3,000 an ounce at the time of this writing. It needs to rise another 16% to reach its inflation-adjusted record and many analysts think it might just get there.
What’s driving this gold rally? The same thing that drove it in 1980—fear.
Back then, the U.S. was grappling with rising inflation, double-digit price increases, and interest rates in the high teens. Investors feared that the dollar and stock market would collapse, that their hard-earned savings would erode into oblivion, and that gold was a safe haven. Sound familiar?
Today, inflation is less dramatic and the stock market would have to go a long way down to even register as a bear market, but it’s still a major concern. Central banks are buying gold at record levels. Gold-backed ETFs, which had been seeing years of outflows, are finally pulling investors back in.
For most, gold isn’t just an investment, it’s an emotional hedge against uncertainty. Back in 1980, I wasn’t thinking about long-term strategy. I was reacting to fear. Inflation had hit 14%, and like many others, I was convinced the dollar would soon be worthless. Gold, I thought, was my best shot at preserving wealth.
The problem? Inflation eventually cooled; it had dropped to an average of 3.5% by the mid-1980s. Gold prices tumbled along with it. Investors who, like me, bought at the peak, 45 years later still haven’t broken even on an inflation-adjusted basis. (My $873 purchase price, adjusted for inflation, equates to $3,580 today.) If I had stuck with a well-diversified portfolio, I likely would have fared much better over time.
Over the years, I’ve come to realize that our financial decisions aren’t just about numbers. They’re deeply influenced by our Internal Financial System™, a framework that helps explain why we handle money the way we do. I now see that my decision to buy gold was a battle between different financial “parts” of myself.
One part panicked, convinced that money was about to become worthless. Another saw gold prices soaring and didn’t want to miss out. Yet another part convinced me that buying at the peak was still a smart move. Had I paused and examined these internal voices, I might have made a different decision.
My gold purchase shows why emotionally driven investment decisions rarely lead to great financial outcomes. Instead of asking, “Is gold a smart long-term investment?” I was asking, “How do I make sure I don’t lose everything?” Those are two very different questions.
If you’re thinking about buying gold, I urge you to consider these questions:
“Am I investing from a place of fear or strategy?” If you’re rushing in because you’re scared of inflation, pause and reassess.
“How does gold fit into my broader financial plan?” Gold can be a great hedge—if held in appropriate amounts in a diversified portfolio. It is best viewed as catastrophic financial insurance, rather than an investment.
“Am I reacting to headlines or making a well-thought-out decision?” The financial media loves a good gold rally. But remember, markets move in cycles. Today’s rally may be history repeating itself.
Back in 1980, fear persuaded me that gold was a sure thing. I forgot an essential caveat—there are no sure things in investing. If bad market timing were an Olympic sport, I’d have taken home the gold (pun intended) for least profitable performance.
Posted on April 25, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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Tesla market value of $780 billion mostly reflects Elon’s future dreams, not car sales. The reality? Only $100-180 billion tied to the actual vehicle business.
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Tesla has a market capitalization as of this writing of $780 billion. It made around $14 billion of profit in 2023 and $7 billion in 2024. A good chunk of profit comes not from selling cars but from regulatory credits. It sold fewer cars in 2024 than in 2023. Unless we see a significant shift change in battery capacity, speed of charging, and improved quality and availability of charging infrastructure, we have reached peak EV penetration (I wrote about this earlier).
However, today Tesla is not trading based on car sales but on future dreams of self-driving robo-taxis, robots, semis, and whatever else Elon dreams up. The car company may be worth $100–180 billion; the rest is what investors are willing to pay for Elon’s dreams.
Quick thoughts on each dream:
Self-driving: I would not trust my life or my kids’ lives to a car company that only uses cameras. They are passive sensors that have limited range and are easily impacted by bad weather. I’ve used Tesla self-driving software – it is great most of the time, except when it’s not – and then it might kill you or others.
Robo-taxis: They may work in geo-fenced areas, but they pose a huge reputational risk to Tesla. One death and this business is done. That’s what happened to Uber’s self-driving business, and why Google’s Waymo has taken a much more conservative route. It uses radar/lidar and launched the service in geo-fenced areas first.
Semis: They were announced in 2017 and were going to hit the road the next year. They are still not out there. I suspect Elon is waiting for a breakthrough in battery technology.
Robots: Exciting, huge market, but this will be a crowded field.
New competition: There are lots of Chinese EVs invading Europe and the rest of the world. BYD looks like a real competitor.
China looked like a great opportunity for Tesla, but may turn into a liability if the trade war intensifies.
Finally, though at times he seems superhuman, Musk is constrained by the number of hours in the day. As of today he is running Tesla, SpaceX, Twitter (x.com), xAI (the maker of Grok – a ChatGPT competitor), The Boring Company, Neuralink, and oh, yes, DOGE. The EV market is getting more, not less, competitive.
An annuity is a contract between you and an insurance company. When you purchase an annuity, you make a lump-sum contribution or a series of contributions, generally each month. In return, the insurance company makes periodic payments to you beginning immediately or at a pre-determined date in the future. These periodic payments may last for a finite period, such as 20 years, or an indefinite period, such as until both you and your spouse are deceased. Annuities may also include a death benefit that will pay your beneficiary a specified minimum amount, such as the total amount of your contributions.
The growth of earnings in your annuity is typically tax-deferred; this could be beneficial as you may be in a lower tax bracket when you begin taking distributions from the annuity.
Warning: A word of caution: Annuities are intended as long-term investments. If you withdraw your money early from an annuity, you may pay substantial surrender charges to the insurance company as well as tax penalties to the IRS and state.
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There are three basic types of annuities — fixed, indexed, and variable
1. With a fixed annuity, the insurance company agrees to pay you no less than a specified (fixed) rate of interest during the time that your account is growing. The insurance company also agrees that the periodic payments will be a specified (fixed) amount per dollar in your account.
2. With an indexed annuity, your return is based on changes in an index, such as the S&P. Indexed annuity contracts also state that the contract value will be no less than a specified minimum, regardless of index performance.
3. A variable annuity allows you to choose from among a range of different investment options, typically mutual funds. The rate of return and the amount of the periodic payments you eventually receive will vary depending on the performance of the investment options you select.
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Feel free to submit education content to the site as well as links, text posts, images, opinions and videos which are then voted up or down by other members. Comments and dialog are especially welcomed.
Daily posts are organized by subject. ME-P administrators moderate the activity. Moderation may also conducted by community-specific moderators who are unpaid volunteers.
Posted on April 20, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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According to colleague Dan Ariely PhD, Bereavement Sex is one of those coping mechanisms that sounds strange but makes sense when you think about it. In the face of loss, our brains crave connection and comfort.
Engaging in sex after a significant loss can be a way to feel alive and regain a sense of control. It’s a testament to our complex emotional wiring, where grief and intimacy intertwine.
The VIX soared to 60.13 last Monday before plummeting all the way to 33.76 on Wednesday, the day after the president paused tariffs. But while the VIX has since settled down a bit, investor fear is still high. The VIX closed above 30 for 10 straight trading sessions and the last time that happened was during the bear market back in October 2022, according to MarketWatch—not exactly a comforting comparison.
Then again, just because fear skyrocketed last week doesn’t mean the markets will tank in turn. “Since 1997, there have been 11 times the VIX spiked above 45—and 10 out of 11 times, the S&P 500 was higher four months later by an average of +6.4%,” noted Austin Hankowitz in the latest edition of the Rich Habits newsletter.
Finally, the VIX closed above 30 Thursady as tariff talk and monetary policy pivots keep investors on their toes. But while worries might keep investors on the sidelines, some on Wall Street are taking this opportunity to be greedy while others are fearful.
Decoy Bias Effect is a dubious phenomenon in decision-making where the introduction of a third, less attractive option (the “decoy”) influences individuals to change their preference between two other options.
The decoy bias effect describes how, when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) can influence our perception of the original two choices. Decoys are “asymmetrically dominated:” they are completely inferior to one option (the target) but only partially inferior to the other (the competitor). For this reason, the decoy effect is sometimes called the “asymmetric dominance effect.”
EXAMPLE: This bias is commonly used in financial planning sales; as well as marketing and mutual fund, ETF, REIT, stock broker, insurance agent and financial advisor pricing strategies to manipulate investor choices.
When you buy a share of stock, you are taking ownership in a company. Collectively, the company is owned by all the shareholders, and each share represents a claim on assets and earnings. If the company distributes profits to its shareholders, you should receive a proportionate share of the earnings.
Stocks are often categorized by the size of the company, or their market capitalization. The market capitalization is determined by multiplying the number of outstanding shares by the current share price. The most common market cap classes are small-cap (valued from $100 million to $1 billion), mid-cap ($1 billion to $10 billion), and large cap ($10 billion to $100 billion).
Stocks are also categorized by their sector, or the type of business the company conducts. Common sectors include utilities, consumer staples, energy, communications, financial, health care, transportation, and technology.
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Stocks are often viewed as being in one of two categories — growth or value.
Growth stocks are ones that are associated with high quality, successful companies that are expected to continue growing at a better-than-average rate as compared to the rest of the market.
Value stocks are ones that have generally solid fundamentals, but are currently out of favor with the market. This may be due to the company being relatively new and unproven in the market, or because the company has recently experienced a decline due to the company’s sector being affected negatively. An example of this would be if the federal government was to levy a new tax on all cell phones, thus negatively affecting all cell phone company stocks.
History has shown that, over time, stocks have provided a better return than bonds, real estate, and other savings vehicles. As a result, stocks may be the ideal investment for investors with long-term goals.
Posted on April 16, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Investors were apparently tired of all the volatility yesterday, leading to a relatively calm day where indexes ever-so-slightly slipped. But it was a big day for Netflix after the Wall Street Journal reported that the streaming giant has plans to double its revenue and reach a $1 trillion valuation by 2030.
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🟢 What’s up
Hewlett Packard Enterprise popped 5.11% after Elliott Investment Management took a $1.5 billion stake in the tech company.
Rocket Lab rocketed (sorry) 10.14% higher after the space stock inked deals with both the US Air Force and the UK Ministry of Defense.
Netflix rose 4.83% on a report from the Wall Street Journal that the streaming giant plans to hit a $1 trillion market capitalization and double its revenue by 2030. The company announces earnings on Thursday.
Bank of America and Citigroup both posted strong Q1 earnings that beat analyst forecasts (more on that below). BofA climbed 3.60%, while Citi rose 1.76%.
Albertsons tumbled 7.49% after the grocer’s full-year guidance came in below expectations.
Allegro Microsystems sank 9.68% on the news that ON Semiconductor has withdrawn its offer to acquire the chipmaker.
Applied Digital plummeted 35.94% after the digital infrastructure company missed analyst revenue estimates, despite sales climbing 22% last quarter.
#recessionindicator: Coty sank 8.57% after the beauty retailer was double downgraded by Bank of America analysts, citing a slowdown in makeup spending.
Posted on April 15, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
WARNING – WARNING
By Staff Reporters
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A “retirement account scam” is a type of online fraud that occurs when a third party administrator (TPA) for retirement investment accounts is tricked into authorizing a money distribution to an imposter posing as the true account holder.
The imposter often starts the scam by calling the TPA, identifying himself or herself as an actual account holder, and requesting a withdrawal distribution form. Once the imposter receives the withdrawal distribution form, the imposter returns the completed form to the TPA. The form is completed with the account holder’s real personal identifying information (PII)—often stolen via schemes, data breaches, and other hacking offenses—and bank account information for an account controlled by the imposter or the imposter’s conspirators.
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After the TPA processes the fraudulent request, the request is forwarded to the investment firm responsible for managing the account holder’s investments, and the funds—often the account holder’s life savings—are then directed to the imposter’s designated bank account.
Posted on April 15, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Stocks kept the good vibes going for a second trading day yesterday with tech companies like Apple rising as investors reacted to the weekend’s news that smartphones and computers would be temporarily exempt from “reciprocal” tariffs—at least until new semiconductor tariffs are imposed.
Car companies also jumped after President Trump suggested he wanted to “help” as automakers try to transition their production to the US in the face of 25% auto tariffs.
Posted on April 14, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
OVER HEARD IN THE FINANCIAL ADVISOR’S LOUNGE
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By Perry D’Alessio, CPA [D’Alessio Tocci & Pell LLP]
What I see in my accounting practice is that significant accumulation in younger physician portfolio growth is not happening as it once did. This is partially because confidence in the equity markets is still not what it was; but that doctors are also looking for better solutions to support their reduced incomes.
For example, I see older doctors with about 25 percent of their wealth in the market, and even in retirement years, do not rely much on that accumulation to live on. Of this 25 percent, about 80 percent is in their retirement plan, as tax breaks for funding are just too good to ignore.
What I do see is that about 50 percent of senior physician wealth is in rental real estate, both in a private residence that has a rental component, and mixed-use properties. It is this that provides a good portion of income in retirement.
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QUESTION: So, could I add dialog about real estate as a long term solution for retirement?
Yes, as I believe a real estate concentration in the amount of 5 percent is optimal for a diversified portfolio, but in a very passive way through mutual or index funds that are invested in real estate holdings and not directly owning properties.
Today, as an option, we have the ability to take pension plan assets and transfer marketable securities for rental property to be held inside the plan collecting rents instead of dividends.
Real estate holdings never vary very much, tend to go up modestly, and have preferential tax treatment due to depreciation of the property against income.
An alternative investment is a financial asset that does not fall into one of the conventional investment categories. Conventional categories include stocks, bonds, and cash. Alternative investments can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts. Real estate is also often classified as an alternative investment.
QUESTION: But what about a medical, podiatric or dental practice?
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AnAlternate Asset Class Surrogate?
A medical practice is much like an alternative investment [AI], or alternate asset class in, two respects.
First, it provides the work environment that generates personal income which has been considered generous, to date.
Second, it has inherent appreciation and sales value that can be part of an exit (retirement) or succession planning transfer strategy.
Conclusion
So, unlike the emerging thought that offers Social Security payments as a surrogate for an asset classes; or a federally insured AAA bond – a medical practice might also be considered by some folks as an asset class within a well diversified modern investment portfolio.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
The vast majority of physicians and medical professionals major in one of the hard science while in college; biology, engineering, chemistry, mathematics, computer science or physics; etc. Few take undergraduate courses in finance, business management, securities analysis, accounting or economics; although this paradigm is changing with modernity. These course are not particularly difficult for the pre-medical baccalaureate major, they are just not on the radar screen for time compressed and highly competitive students; nor are they needed for medical or nursing school admission, or the many related allied health professional schools.
In fact, William C. Roberts MD, originally from Emory University in Atlanta, and former editor for the Baylor University Medical Center Proceedings and The American Journal of Cardiology, opined just a decade ago:
“Of the 125 medical schools in the USA, only one of them to my knowledge offers a class related to saving or investing money.”
And so, it is important to review some basic principles of economics, finance and accounting as they relate to financial planning in thees two textbooks; and this ME-P.
Posted on April 12, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
US stocks turned higher on Friday to cap a chaotic week on Wall Street, as investors weighed the latest tariff-related developments in the trade war between the US and China.
The S&P 500 (^GSPC) rose 1.8% after seesawing earlier in the session. The tech-heavy NASDAQ Composite (^IXIC) climbed 2.1%. The Dow Jones Industrial Average (^DJI) advanced 1.5%, about 600 points.
Posted on April 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters and Morning Brew
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Microsoft is celebrating its 50th birthday this week looking like a formerly washed up A-lister who’s suddenly rebounded and getting Oscar noms again.
Ever since Bill Gates and Paul Allen huddled in a garage in 1975 to start a company that’d define the experience of sitting in front of a boxy white PC monitor, Microsoft has had an uneven run. But after years of getting roasted for Internet Explorer, it now seems to be back on top—even briefly beating Apple as the world’s most valuable public company last year.
The tech giant can not only boast bonanza earnings, it also feels like a purveyor of the next big thing again, leading in the AI race through its partnership with OpenAI.
Windows washed
In the 1990s, it felt like Microsoft’s computer geeks were the overlords of tech. Windows powered most PCs, Internet Explorer became the go-to browser, and proficiency in Office tools became standard resume skills. But in the following decade, the company slept on internet tech and smartphones, ceding ground to Apple, Alphabet, and Meta.
It responded by going into midlife crisis mode, aka blowing cash on a series of questionable acquisitions to stay hip. That…didn’t help. By the 2010s, only grandparents could be reached @hotmail.com, Windows phones were a rarity, and no one used Bing as a verb.
When Gates stepped away from running the company in 2000, its new CEO Steve Ballmer grew its revenue threefold by the end of his tenure in 2013. He spearheaded Microsoft’s foray into gaming with the Xbox console and started its blockbuster cloud computing product Azure. But Microsoft’s profit growth slowed dramatically thanks to a massive cash bleed from its shopping spree.
It dropped $6.3 billion on the owner of ad tech platforms aQuantive to compete with Google’s ad business in 2007, only to write it off as a dud five years later.
The company burned at least $8 billion trying to make Windows phones a bigger force by buying Nokia’s cellphone division in 2014.
Microsoft paid $8.5 billion for Skype in 2011, which must’ve made it extra painful to announce that it was sunsetting the video calling service this winter.
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Cash-slinging comeback kid
When it blew out forty candles in 2015, the tech giant was looking past its prime. The stock was trading at around $35 a share, well below its $58 peak in 1999. Its net profit for the year was $12 billion. But investors who held on until now were rewarded with shares going for $374 on its birthday this week after the company reported a net profit of $88 billion in the last financial year.
Much of the revenue now comes from its Azure cloud computing business, which has been boosted by the booming AI industry ravenous for server power.
When Microsoft’s current CEO Satya Nadella stepped into the role in 2014, he doubled down on Azure to make Microsoft into a B2B behemoth selling computing power to tech companies.
It is now the world’s second largest cloud provider after Amazon Web Services, with a 21% market share, according to Synergy Research Group.
Microsoft also bought some businesses that didn’t fail, including LinkedIn—the thought leadership hub with a user base that has soared to 1 billion since the 2016 acquisition. It also owns GitHub, the leading code-sharing platform for software developers. And in its biggest purchase yet, it snagged gaming IP giant Activision Blizzard that owns Call of Duty and World of Warcraft for a whopping $68 billion in 2022, hoping to make itself a dominant caterer to the Xbox joystick-wielding crowd.
It’s an AI company now
The not-quite-acquisition that really got Microsoft its groundbreaker’s glitz back was pouring $13 billion into OpenAI.
Having gotten in on the ground floor of the AI boom, Microsoft is harnessing OpenAI’s models to power its CoPilot AI agent, which it embedded into its Office tools and Teams app. This pits it against other tech giants betting that AI agents automating tasks will be the biggest in-cubicle revolution since Excel.
Financial Modeling is one of the most highly valued, but thinly understood, skills in financial analysis. The objective of financial modeling is to combine accounting, finance, and business metrics to create a forecast of a company’s future results.
According to Jeff Schmidt, a financial model is simply a spreadsheet, usually built in Microsoft Excel, that forecasts a business’s financial performance into the future. The forecast is typically based on the company’s historical performance and assumptions about the future and requires preparing an income statement, balance sheet, cash flow statement, and supporting schedules (known as a three-statement model, one of many types of approaches to financial statement modeling). From there, more advanced types of models can be built such as discounted cash flow analysis (DCF model), leveraged buyout (LBO), mergers and acquisitions (M&A), and sensitivity analysis
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DEFINED TERMS
Discounted Cash Flow (DCF): A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money. It’s like deciding whether a treasure chest is worth diving for now, based on the gold coins you’ll be able to cash in later.
Sensitivity Analysis: This involves changing one variable at a time to see how it affects an outcome. Imagine tweaking your coffee-to-water ratio each morning to achieve the perfect brew strength.
Budget – A budget is the amount of money a department, function, or business can spend in a given period of time. Usually, but not always, finance does this annually for the upcoming year.
Rolling Forecast – A rolling forecast maintains a consistent view over a period of time (often 12 months). When one period closes, finance adds one more period to the forecast.
Topside – A topside adjustment is an overlay to a forecast. This is typically completed by the corporate or headquarter team. As individual teams submit a forecast, the consolidated result might not make sense or align with expectations. When this occurs, the high-level teams use a topside adjustment to streamline or adjust the consolidated view.
Monte Carlo Simulation: Picture yourself at the casino, but instead of gambling your savings away, you’re using this technique to predict different outcomes of your business decisions based on random variables. It’s like playing financial roulette with the odds in your favor.
What-If Analysis: Ever daydream about what would happen if you took that leap of faith with your business? This tool allows you to explore various scenarios without risking a dime. It’s like trying on outfits in a virtual dressing room before making a purchase.
Leveraged Buyout (LBO) Model: This is a bit like orchestrating a heist, but legally. It’s about acquiring a company using borrowed money, with plans to pay off the debts with the company’s own cash flows. High stakes, high rewards.
Mergers and Acquisitions (M&A) Model: Picture two puzzle pieces coming together. This model evaluates how combining companies can create a new, more valuable entity. It’s the corporate version of a matchmaker.
Three Statement Model: The holy trinity of financial modeling, linking the income statement, balance sheet, and cash flow statement. It’s like weaving a tapestry where each thread is crucial to the overall picture.
Capital Asset Pricing Model (CAPM): A formula that calculates the expected return on an investment, considering its risk compared to the market. It’s like choosing the best roller coaster in the park, balancing thrill and safety.
Cash Flow Forecasting: This is your financial weather forecast, predicting the cash flow climate of your business. It helps you plan for sunny days and save for the rainy ones.
Cost of Capital: The price of financing your business, whether through debt or equity. It’s like the interest rate on your growth engine, pushing you to maximize every dollar invested.
Debt Schedule: A timeline of your business’s debts, showing when and how much you owe. It’s your roadmap to becoming debt-free, one milestone at a time.
Equity Valuation: Determining the value of a company’s shares. It’s like assessing the worth of a rare gemstone, ensuring investors pay a fair price for a piece of the treasure.
Financial Leverage: Using debt to amplify returns on investment. It’s like using a lever to lift a heavy object, increasing force but also risk.
Forecast Model: A crystal ball for your finances, projecting future performance based on past and present data. It’s your guide through the financial wilderness, helping you navigate with confidence.
Operating Model: A detailed blueprint of how a business generates value, mapping out operational activities and their financial impact. It’s like laying out the inner workings of a clock, ensuring every gear turns smoothly.
Revenue Growth Model: This tracks potential increases in sales over time, charting a course for expansion. It’s like plotting your ascent up a mountain, anticipating the effort required to reach the summit.
I am in an unenviable position. The policy coming out of the White House has a significant impact on economics, more than ever before in my career. If I say anything positive about that policy, I’ll be put in the MAGA camp. If I criticize it, I’ll be accused of suffering from Trump derangement syndrome. I am hired by you to make the best investment decisions possible. Rather than see me as engaged in political commentary, I’d ask that you view my remarks as purely analytical.
Let me give you this analogy. I live in Denver. Let’s imagine I am a huge Broncos fan, and the Broncos are playing the Chicago Bears. If I am betting a significant amount of money on this game, I should put my affinity for the Broncos and hatred of the Chicago Bears aside and analyze data and facts. The Broncos are either going to win or lose; my wanting them to win has zero impact on the outcome. The same applies to my analysis here. My motto in life is Seneca’s saying, “Time discovers truth.” I just try to discover it before time does.
When it comes to politics, I also have a significant advantage. I was not born in this country. From a young age, I was brainwashed about communism, not about team Republican versus team Democrat. The failure of the Soviet Union de-brainwashed me fast concerning the virtues of communism and converted me into a believer in free markets.
As a result, I never bought into either party’s ideology, and thus in the last four presidential elections I voted for a Republican, an independent, a Democrat, and wrote in my youngest daughter, Mia Sarah (not in that order). In my articles I have criticized the policies of both Biden (student loan forgiveness, unions) and Trump (Bitcoin reserve).
I remind myself that in times like these you have to be a nuanced thinker. Some of Trump’s policies are terrific, others … not so much (I am being diplomatic here).
Scott Fitzgerald once said “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time, and still retain the ability to function.” In 2025 we are taking this “first-rate intelligence” test daily.
What will happen to the US dollar? The US dollar will likely continue to get weaker, which is inflationary for the US. Let me start with some easily identifiable reasons:
We have too much debt. We ran 6-7% budget deficits while our economy was growing and unemployment was at record lows. Now we have $36 trillion in debt. Our interest expenses exceed our defense spending, and these costs will continue to climb. If/when we go into recession, we may see something we have not seen in a long time – higher interest rates. Our budget deficits will balloon to between 9–12%, and the debt market, realizing that inflation (i.e., money printing) is inevitable, will say, “Pay up!”
New competition from Bitcoin. President Trump’s approval of Bitcoin as a potential reserve currency is one of the most self-serving and anti-American things I’ve seen any president do. The US dollar is the world’s reserve currency. We still have little competition for that title. China could be a contender, but it is not a democracy and has capital controls. This policy has no upside for America, only downside.
A stronger Europe. Ironically, we may inadvertently create a stronger Europe by threatening to abandon NATO. I don’t want to insult European clients (or my European friends), but the following analogy describes the US-Europe relationship on some level: Europe gradually evolved into a trust fund kid (when it came to security) and the US turned into its sugar daddy. The trust fund kid was incredibly dependent on the sugar daddy. It criticized its parent for being a barbarian and money-driven, but it relied heavily on that parent to protect it from bullies.
President Trump cut off Europe’s allowance by threatening that the US might not protect Europe from Russia. This has forced Europe to spend more money on defense. Outside of Germany (which has little debt), few European economies can afford that. This may force Europe (or at least some European countries) to become more pragmatic – to cut social programs and bureaucracy. If this leads to a stronger Europe both economically and militarily, the euro will be competing with the US dollar. This is a big if.
Our new foreign policy.
When people describe President Trump’s foreign policy as “transactional,” they’re highlighting a fundamental shift in how America engages with the world – one with profound implications for our global standing, national interests, and the US dollar. The shift affects both types of capital – financial and reputational.
Reputational capital isn’t at risk in ‘one-shot’ transactions like house selling. Imagine you’re selling your primary residence and moving elsewhere. Do you disclose every flaw, or let the buyer figure things out? Your incentive is to maximize short-term profits. You’ll likely never meet this buyer again, and therefore there are incentives not to care what they’ll think of you afterward. You’ll be transactional, seeking the highest price possible for your biggest asset. This exemplifies a ‘one-shot’ system where future interactions aren’t expected.
Contrast this with a relationship- and trust-based system. Now imagine you are a homebuilder in a small town. Your suppliers only extend credit if you have a reputation for paying on time. Your employees do quality work only if you treat them fairly. Your buyers tell friends about their experience with you. The incentives naturally create a relational approach. In this trust-based system, incentives skew toward maximizing long-term profits, where reputational capital becomes the glue creating continuity.
Reputational capital radiates predictability – you know how someone will behave based on their history – but operating with low or negative reputational capital is difficult and expensive. People won’t enter long-term contracts with you or will demand external guarantees. Many potential partners will simply refuse to deal with you.
Building reputational capital works like adding pennies to a jar – each good deed incrementally adds to your standing. Yet reputational capital can collapse instantly by removing the jar’s bottom. A single breach of trust doesn’t just remove one penny; it can wipe out your entire balance and plunge you into reputational bankruptcy. The math is brutally asymmetric: good deeds might add a point or two, while bad deeds subtract by factors of 50 or 100.
This doesn’t mean transactions shouldn’t be profitable. If you’re accumulating reputational capital while consistently losing money, you’re probably in the wrong business. Each deal should be evaluated considering both long-term financial and reputational capital.
Individual transactions can sacrifice some profit but cannot afford to lose reputational capital. A “one-shot” transactional approach used in a trust-system environment may provide greater short-term profitability, but if this success comes at the expense of reputational capital, the long-term consequences for America’s global position could be devastating.
This brings us to our current foreign policy.
Relationships between nations are a trust-based system. I’d argue it’s a super-relational system because it’s multigenerational, lasting beyond the life of any one human. Reputational capital is paramount here.
Part of the US’s strength has been the soft power – the reputational capital – it exerted. We had a lot of friends, which helped us to be more effective in dealing with our foes. We keep telling ourselves that America is an “exceptional” nation. This exceptionalism didn’t just come from our financial and military might – it accumulated based on our reputational capital.
Though we don’t always succeed, we are a people who try to do the right thing. Our exceptionalism has been earned through our actions. We are the country that helped rebuild Europe and gave it six decades to repay lend-lease. We toppled communism.
I don’t know the nuances of the Ukraine mineral deal, but initially it had the optics of extortion. Though I think the renegotiated and signed version appears to be fair to both sides, forcing repayment while Ukraine is dodging Russian missiles made the US look transactional.
Actions by President Trump over the last month have undermined our reputation. We are quickly becoming a “one-shot” transactional player in a trust-based environment. Imposing tariffs on Canada on a whim to try to get it to become the 51st state erodes American reputational capital. So does not ruling out America invading Greenland. This puts us on the same moral plane as Russia invading Ukraine.
The conversation about tariffs has many nuances. For instance, I don’t know anyone who opposes reciprocal tariffs – they seem fair and don’t consume any reputational capital. But tariffs that are used as weapons in a trade war in order to annex another country erode reputational capital. Threatening to leave NATO and not protect countries that don’t spend enough on their defense diminishes reputational capital. Maybe the only way to get European countries to spend on defense was to threaten not to defend them – you can agree or disagree with the rationale behind each of Trump’s decisions, but what can’t be argued is that they undermined our reputational capital.
As we lose soft power, our influence will diminish, and thus so will perceptions of our power. The world will start looking at us not from the perspective of the continuity of generations but of presidential cycles. The word of the American president will have an expiration date of the next presidential or mid-term election.
There are two negotiation styles – Warren Buffett’s and Donald Trump’s. Both have their advantages and disadvantages. Buffett will give you one offer and one offer only. Once the deal is agreed to, even just verbally, that is the deal. Critics would say that there is downside to that predictability, as foes know how you are going to respond. Donald Trump’s style is to be unpredictable, which has its own advantages when you deal with foes – it keeps opponents guessing. But it destroys trust with your allies.
In a world of fiat currencies, all currency is a financial and reputational promise. President Trump, with the help of DOGE (and maybe even tariffs) may increase our financial strength. I hope he does, but it will likely come at a very high cost to our reputational capital, and therefore US global influence and the US dollar will continue its decline.
How are we positioned for this?
About half of our portfolio is foreign companies whose sales are not in dollars. They will benefit from a weaker dollar. We also have exposure to oil, which is priced in the US dollar and usually appreciates when the dollar weakens.
A weaker dollar means our imports will become more expensive, which is inflationary. We own many companies with pricing power and also companies that have claims on someone else’s revenues. Take Uber for example: they get about 20% of each ride. If the cost of the ride goes up, so does their dollar take.
Why does President Trump keep pushing crypto?
In July 2019, Trump said the following: “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.” Five years later he promised to establish the US Crypto Reserve, and in 2025 he did.
What changed? There is no logical reason for an American president to endorse crypto. None. Here is the honest answer: Crypto bros made mega-contributions to his campaign.
To top it off, three days before he took office he issued $TRUMP – a shitcoin. Believe it or not, “shitcoin” is a technical term in the crypto community (any coin other than Bitcoin is called a shitcoin by Bitcoin “maximalists”, folks who believe Bitcoin is the one and only digital currency). The future sitting president literally issued – I don’t want to call it a currency, so I guess shitcoin is the right name – that will at some point decline to zero in value. In other words, he’ll fleece his loyal followers who purchase $TRUMP of billions of dollars.
I previously referenced both reputational capital and soft power. These types of acts by a sitting president subtract from both.
Posted on April 9, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Just after midnight, President Trump’s “reciprocal” tariffs went into effect against 86 countries. Analysts have estimated that the new US average effective tariff rate is north of 20%, the highest in more than 100 years. Ahead of the tariff deadline, markets swung violently, mostly way down: According to Bloomberg’s Cameron Crise, yesterday was the fourth straight trading day when the S&P 500’s trading range was 5% or more. That’s only happened in 1987, 2008, and 2020.
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The Apple A18 and Apple A18 Pro are a pair of 64-bit ARM-based system on a chip (SoC) designed by Apple Inc., part of the Apple silicon series. They are used in the iPhone 16 and iPhone 16 Pro lineups and the iPhone 16e, and built on a second generation 3 nm process by TSMC.
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Yesterday, for several hours on Tuesday, it looked like stocks were going to regain some of the ground lost during the market’s very bad week. But after the Trump administration made it clear that its increased tariffs on China would go into effect, all three indexes plunged. Apple, which makes most of its iPhones in China, was hit harder than many of its Big Tech peers.
So shoppers are thinking it’s better to have an Apple A18 processor and not need it, than to need it and not have it. Apple customers are scrambling to buy new iPhones out of fear that the company could raise prices to offset President Trump’s tariffs.
Employees at locations throughout the US said they’re being bombarded with questions about potential price hikes and have witnessed customers panic-buying phones. Though Apple declined to comment to Bloomberg, its retail stores reportedly saw higher sales over the last weekend than in previous years.
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