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Here’s how the Buy, Borrow, Die strategy works step-by-step:

Step 1. Buy Assets

This step, broadly known as the accumulation phase, is about acquiring or creating valuable assets. It’s the most critical step taken by wealthy individuals to secure their wealth. Billionaires, for instance, often created startups that eventually turned into massive corporations. The asset here is the company they’ve established.

However, this isn’t the only way to accumulate assets. For professionals like doctors and lawyers, this phase involves securing a high-paying job and buying assets that have the potential to appreciate over time—like stocks, real estate, and private capital. Once an individual reaches a substantial level of wealth, they can leverage these assets in interesting ways using the next step of this strategy.

Step 2. Borrow Against Your Assets

This where the assets you’ve acquired are used as collateral to borrow money—all without triggering a taxable event.

Suppose you’ve got a robust stock portfolio. You can then take out a Securities Backed Line of Credit (SBLOC). This kind of loan lets you tap into the value of your portfolio without having to sell off any assets and subsequently paying capital gains taxes. What makes SBLOCs attractive to lenders is the relative ease with which the securities can be seized and sold, making them a low-risk lending option.

The ceiling for such a loan is usually around 50% of your portfolio’s value. However, we often caution against borrowing more than 25% of your account balance, especially for long-term loans. This will provide a cushion against stock market volatility, much like what we experienced in 2022 and 2023.

Borrowing against assets isn’t limited to stock portfolios either. Let’s say you own a home and have built up a certain amount of equity in it. You could opt for a Home Equity Line of Credit (HELOC), using your home as collateral. Banks tend to favor real estate-backed loans due to their stability compared to the fluctuating value of stocks.

Step 3. Die and Pass Your Wealth On

The final step in the strategy is where the proverbial tax baton is handed off to the next generation.

Under the existing tax code, when you pass away, your heirs receive a “stepped-up basis” on the assets they inherit from you. This means that their cost basis—the original amount paid for an asset—is stepped up to the market value of the asset at the time of your death. Meaning once you have passed away, your heirs would be able to sell the assets without having to pay taxes on the capital gain. Imagine you had purchased a building 20 years ago for $1 million and over the years, the value of that building increased to $2.5 million. If you were to pass away at this point, your heirs would inherit the building with the stepped-up cost basis of $2.5 million. This implies that if they decide to sell the property at this valuation, they wouldn’t owe any capital gains tax. This is because for tax purposes, their gain is calculated from the $2.5 million, not the original $1 million.

By utilizing this loophole, families can pass on their wealth without incurring a hefty tax bill. This is why many wealthy families set up trusts – it’s a way to manage and pass on their wealth at a stepped-up cost basis.

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EXPECTED: Breakeven Inflation Rate

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

Measure of Expected Inflation

By Staff Reporters

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The breakeven inflation rate is the difference between the nominal yield (usually the market yield, which includes an inflation premium) on a fixed-income investment and the real yield (with no inflation premium) on an inflation-linked investment of similar maturity and credit quality.

So, if inflation averages more than the breakeven rate, the inflation-linked investment will outperform the investment with the nominal yield.

Conversely, if inflation averages below the breakeven rate, the investment with the nominal yield will outperform the inflation-linked investment.

Breakeven inflation rates are also considered useful measures of inflation expectations—higher breakeven rates represent higher inflation expectations (and higher relative prices for inflation-linked investments), while lower breakeven rates represent lower inflation expectations (and lower relative prices for inflation-linked investments).

Therefore, ideally, investors want to purchase inflation-linked investments when breakeven rates are relatively low because that’s typically when prices are also relatively low.

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COMMODITIES: Futures and Intensity Types

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

By Staff Reporters

DEFINITIONS

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Commodities: Commodities are raw materials or primary agricultural products that can be bought or sold on an exchange or market. Examples include grains such as corn, foods such as coffee, and metals such as copper.

Commodity Futures: Agreements to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date related to basic raw materials such as precious metals and natural resources.

Commodity Intensity: Commodity intensity refers to commodity usage per unit of economic growth. An emerging, more manufacturing-based economy will usually be more commodity intensive in terms of its growth than will a more developed, service-oriented economy.

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ATTENTION: Direct and Misdirected

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

By Staff Reporters

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Humans use cognitive information to Direct Attention to relevant objects (targets) in a visual scene. Information such as the target’s color or location is represented as a ‘perceptual set’. Similarly, advance information about the required response to a target is represented as a ‘motor set’.

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MisDirected Attention however is like polishing the brass on the Titanic while ignoring the iceberg. Our brains love details, sometimes too much. We focus on the minutiae and miss what’s really important. This is why you might spend more time choosing a font than writing the actual content.

For example, have you ever spent hours perfecting the details of a project only to miss the big picture? That’s misdirected attention, according to Dan Ariely PhD.

Always remember, it’s easy to get lost in the weeds. Keep an eyes on the horizon.

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FINANCIAL: Rule of 20 Defined

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

A Dimensionless Number

By Staff Reporters

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What is the Rule of 20?

The Rule of 20 is a dimensionless number that adds the current 12-month trailing Price to Earnings Ratio to the annual change in an index of the annual consumer inflation rate. A reading below 20, while a market is trending lower, means that we could be near a bottom.

In the United States, the most common index used is the broad-based S&P 500, and CPI-U is used as a proxy for inflation.

The Rule of 20 is purportedly a rule from Peter Lynch. In chapter 39 of Graham and Dodd’s seminal Security Analysis, they mention: “We would suggest that about 20 times average earnings is as high a price as can be paid in an investment purchase of a common stock” … with no mention of inflation.

Lynch’s formulation attempts to factor the ‘gravity’ of interest rates into the fair value of a stock. And, as you can see, the measure has fluctuated quite a bit. However, it has returned to roughly the 20 level repeatedly.

MORE: https://dqydj.com/sp-500-rule-of-20-calculator/

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LEGAL: Pro Hac Vice Defined

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

By Staff Reporters

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Pro hac vice is Law Latin that means “for this time [only]” (literally, “for this turn”). When a lawyer is admitted to a case pro hac vice, a court has granted them a limited license to practice in a jurisdiction where they otherwise would not be licensed to do so.

For example, a lawyer licensed only to practice in California may nonetheless practice in a New York case once a court has granted them admission pro hac vice, so long as the lawyer practices only within the limited scope of their pro hac vice admission. In almost all U.S. jurisdictions, lawyers who practice pro hac vice must do so in conjunction with a local lawyer acting as local counsel. Local counsel typically acts as an anchor to the bar of a foreign jurisdiction, exposing local counsel to liability for the acts or omissions of the lawyer admitted pro hac vice. Local counsel therefore usually assumes, at a minimum, a role of monitoring the lawyer admitted pro hac vice.

READ: https://www.law.cornell.edu/wex/pro_hac_vice

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DEFINED: Public Benefit Corporations

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

By Staff Reporters

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What Is a Public Benefit Corporation?

A benefit corporation—also known as a B Corporation—has shareholders who own the company, unlike a non-profit. So making money is the point, just not the whole point.

While non-profits (or not-for-profits) serve a public benefit and don’t make any profits, benefit corporations want to make money while still serving a greater purpose than itself “and a desire for the corporation to help make the world a better place,” according to Rick Bell of Harvard Business Services.

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MYOPIA: Prime Financial Earning Years

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

COGNITIVE BIAS

SPONSOR: http://www.MarcinkoAssociates.com

By Staff Reporters

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Myopia makes it hard for us to imagine what our lives might be like in the future.

For example, because we are young, healthy, and in our prime earning years now, it may be hard for us to picture what life will be like when our health depletes and we know longer have the earnings necessary to support our standard of living.

According to colleague Dan Ariely PhD, this short sighted cognitivebias makes it hard to save adequately when we are young, when saving does the most good.

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MEDIA HEADLINES: Financial Security Risk Management

Posted on December 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Headline risk refers to the risk that a negative news media headline about one security issuer, incident or sector could affect the demand for and pricing of a much wider swath of securities, including those that have no direct relation to the securities headlined and whose fundamentals (defined above) remain intact.

Financial analyst Meredith Whitney’s appearance on “Sixty Minutes” in December 2010 was a classic example of the potential impact of headline risk, when her prediction of “a spate of municipal bond defaults” helped trigger a massive municipal bond market selloff, even though most municipal bonds actually faced no immediate default threat at that time, and the number of municipal defaults actually declined in the subsequent 12 months.

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DAILY UPDATE: Walgreens to PE as CPI Upticks and Markets Blast Off this Morning

Posted on December 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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According to reporting from the Wall Street Journal, the pharmacy chain Walgreen’s is discussing selling to private equity (PE) firm Sycamore Partners, a deal that could close early next year. This comes following a tumultuous year for the company, which announced it would close 1,200 stores in October and laid off more than 250 employees in November. The PE firm is allegedly considering selling off pieces of the business or working with partners, sources told the Journal. Following the news, Walgreens’s stock jumped 28%, its biggest single-day increase since 1980, according to Yahoo Finance.

Inflation rose 2.7% on an annual basis in November, according to the latest government report on the Consumer Price Index, or CPI. Last month’s CPI was forecast to come in at 2.7%, according to economists surveyed by financial data firm FactSet. The Consumer Price Index, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.

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US stocks opened higher on Wednesday as investors digested another month of sticky inflation data that met economists’ expectations and likely pointed to a Federal Reserve interest rate cut next week. The Dow Jones Industrial Average (^DJI) increased about 0.2%, while the S&P 500 (^GSPC) jumped nearly 0.5%. The tech-heavy NASDAQ Composite (^IXIC) also added to across-the-board gains, rising roughly 0.8%.

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

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RICHARD EASTERLIN: Happiness Paradox

Posted on December 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Richard Easterlin PhD, Paradox: For countries with income sufficient to meet basic needs, the reported level of happiness does not correlate with national income per person.

According to colleague Dan Ariely PhD, one explanation is that my happiness depends on a comparison between my income and my perceptions of the average standard of living. If everyone’s income increases, my increased income gives a short boost to my happiness, since I do not realize that the average standard of living has gone up. Some time later, I realize that the average standard of living has also gone up, so the happiness boost produced by my increased income disappears. It is the contradiction between the point-of-time and time series findings that is the root of the paradox: while there is a correlation at a fixed point, there is no trend over multiple points.

That is, in the short run, everyone perceives increases in income to be correlated with happiness and tries to increase their incomes. However, in the long run, this proves to be an illusion, since everyone’s efforts to raise standards of living lead to increasing averages, leaving everyone in the same place in terms of relative income.

Various theories have been advanced to explain the paradox, but the paradox itself is solely an empirical generalization. The existence of the paradox has been strongly disputed by other researchers.

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MEMORY: Fallible & Impressionable

Posted on December 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Memory is Fallible/Memory is Impressionable: This concept refers to the inherent unreliability of human memory and its susceptibility to distortion and manipulation. Memory is not a perfect recording of events; instead, it is reconstructive, meaning that when we recall information, our brains can inadvertently alter or fill in gaps based on existing beliefs, emotions, or narratives. This can lead to the incorporation of false details that align with what we already know or expect to be true, resulting in vivid but inaccurate recollections.

Consequently, according to colleague Dan Ariely PhD, our memories can be influenced by suggestion, context, and social pressures, making them susceptible to biases and inaccuracies, much like a “con man” leading us to believe things that may not reflect reality.

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DAILY UPDATE: Medicare Open Enrollment Ends as Stock Market Weekly Gains

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

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Medicare Open enrollment ended December 7th, 2024. New Plans commence January 1st, 2025.

Potential Market-Moving Catalysts:

Economic:

Monday (12/9): Wholesale Inventories
Tuesday (12/10): Productivity-Revised, Unit Labor Costs-Revised
Wednesday (12/11): Consumer Price Index (CPI), EIA Crude Oil Inventories, MBA Mortgage Applications Index, Treasury Budget
Thursday (12/12): Producer Price Index (PPI), EIA Natural Gas Inventories, Initial Claims, Continuing Claims
Friday (12/13): Export Prices ex-ag, Import Prices ex-oil

Earnings:

Monday (12/9): Oracle Group (ORCL), MongoDB Inc. (MDB), Toll Brothers Inc. (TOL), Casey’s General Stores Inc. (CASY), Vail Resorts Inc. (MTN)
Tuesday (12/10): AutoZone Inc. (AZN), Ferguson Enterprises Inc. (FERG), Academy Sports and Outdoors Inc. (ASO), GameStop Corp. (GME)
Wednesday (12/11): Adobe Inc. (ADBE), Nordson Corp. (NDSN), REV Group Inc. (REVG)
Thursday (12/12): Ciena Corp. (CIEN), Broadcom Inc. (AVGO), Costco Wholesale Corp. (COST)
Friday (12/13): -no reports-

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U.S. stocks closed mostly higher Friday, with the S&P 500 and NASDAQ Composite each notching fresh record peaks after the latest employment report showed jobs growth bounced back in November. The S&P 500 rose 15.16 points, or 0.2%, to end at 6,090.27. The NASDAQ climbed 159.05 points, or 0.8%, to close at 19,859.77. The Dow Jones Industrial Average fell 123.19 points, or 0.3%, to end at 44,642.52.

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

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SYNTHETIC EQUITY: Deferred Compensation for Financial Advisors

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

DEFINED FOR FINANCIAL ADVISORS

By Dr. David Edward Marcinko MBA MEd

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Think of synthetic equity as a communal garden. You don’t own the plot, and you don’t necessarily have a say in what’s planted, but you’re guaranteed a share of the crops that are harvested.

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

Synthetic equity is a form of deferred compensation that mirrors some of the benefits of real stock ownership without granting actual shares. It’s a contractual agreement between you and your employer that entitles you to a payout upon certain events—such as an IPO, acquisition, or surpassing earnings milestones.

Companies use synthetic equity plans to motivate their personnel through growth-related incentives. In other words, it grants employees a sense of ownership without issuing shares or altering the business’s ownership structure. As the company succeeds and appreciates in value, so does your potential payout. Although you don’t own actual shares of company stock, you are compensated as if you did.

READ: https://tinyurl.com/mr3upbn6

According to Carla McCabe, synthetic equity programs also have a significant tax advantage to both business owners and the key employees.

For example, when a key employee receives shares under the firm’s synthetic equity program, the IRS does not recognize that receipt as taxable income to the employee until he or she actually receives the money. This usually occurs when the firm is sold or when the employee retires and is cashed out (assuming the employee’s synthetic shares are vested). This is very attractive considering that regular shares are taxed as ordinary income and the employee basically has to pay the associated tax even though he or she didn’t receive any cash.

Of course, all this begs the question: Why would a company offer synthetic equity instead of actual equity?

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DOOMSCROLLING & DOOMSURFING: Defined

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

By Dr. David Edward Marcinko MBA MEd

SPONSOR: http://www.MarcinkoAssociates.com

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Two years ago, prior to the 2022 election, mental health experts alerted the medical world to their version of an assessment scale for yet another new condition – “doomscrolling.”

As defined by the National Library of Medicine in the article, “Constant exposure to negative news on social media and news feeds could take the form of ‘doomscrolling’ which is commonly defined as a habit of scrolling through social media and news feeds where users obsessively seek for depressing and negative information.”

And so, formally Doomscrolling or doomsurfing is the act of spending an excessive amount of time reading large quantities of news, particularly negative news, on the web and social media. Doomscrolling can also be defined as the excessive consumption of short-form videos or social media content for an excessive period of time without stopping. The concept was coined around 2020, particularly in the context of the COVID pandemic.

Surveys and studies suggest doomscrolling is predominant among youth. It can be considered a form of internet addiction disorder. In 2019, a study by the National Academy of Sciences found that it can be linked to a decline in mental and physical health. Numerous reasons for doomscrolling have been cited, including negativity bias and FOMO [fear of missing out], and attempts at gaining control over uncertainty.

QUERY: What about the roaring stock market, post the 2024 presidential election. Fundamental analysis or FOMO?

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CURSE: Knowledge and Hindsight Bias

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

By Staff Reporters

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Similar to the availability heuristic (Tversky & Kahneman, 1974) and to some extent, the false consensus effect, once you really understand a new piece of information, that piece of information is now available to you and often becomes seemingly obvious. It might be easy to forget that there was ever a time you didn’t know this information and so, you assume that others, like yourself, also know this information: ie., the curse of knowledge.

However, it is often an unfair assumption that others share the same knowledge.

And so, the hindsight bias is similar to the curse of knowledge in that once we have information about an event, it then seems obvious that it was going to happen all along.

IOW: I should have seen it coming!

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VALUATION OF HOSPITALS: Reimbursement Environment

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

By Health Capital Consultants, LLC

The U.S. government is the largest payor of medical costs, through Medicare and Medicaid, and has a strong influence on reimbursement to hospitals. In 2022, Medicare and Medicaid accounted for an estimated $944.3 billion and $805.7 billion in healthcare spending, respectively. The prevalence of these public payors in the healthcare marketplace often results in their acting as a price setter, and being used as a benchmark for private reimbursement rates.

This third installment of the series discusses the reimbursement environment in which hospitals operate. (Read more…)

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The “Shadow Self”

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

By Staff Reporters

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The Shadow Self is like the dark twin you never knew you had. It’s the part of your personality that lurks in the background, hiding your less-than-perfect traits. Think of it as the villain in your personal movie, full of suppressed desires and impulses.

According to colleague Dan Ariely PhD, acknowledging your shadow self can be a bit like therapy – uncomfortable but ultimately enlightening.

So, embrace your inner Darth Vader, and you might just find a better balance between light and dark.

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DAILY UPDATE: Anthem Health Insurance Cost Cutting as Markets Pause

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

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Health insurance companies are under scrutiny for proposed changes to anesthesia billing policies, raising concerns about patient safety and fair compensation for medical professionals. Anthem, a major health insurer, recently announced a controversial policy limiting payments for anesthesia services in Connecticut, Missouri, and New York. The policy would only cover part of the documented anesthesia time during a patient’s surgery, a decision strongly opposed by the American Society of Anesthesiologists (ASA).

Breaking News: Anthem health insurance company is backing off of a controversial plan to limit coverage of anesthesia in at least one state, according to Connecticut’s comptroller.

WEEKLY UPDATE: SCHEDULE

December 6: November nonfarm payrolls, University of Michigan preliminary December Consumer Sentiment.

December 9: October final wholesale inventories, November consumer inflation expectations, and expected earnings from Toll Brothers (TOL) and MongoDB (MDB).

December 10: Third quarter productivity and unit labor costs and expected earnings from AutoZone (AZO).

December 11: November Consumer Price Index and expected earnings from Adobe (ADBE).

December 12: November Producer Price Index and expected earnings from Broadcom (AVGO), Ciena (CIEN), and Costco (COST).

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

Here’s where the major benchmarks ended:

The SPX fell 11.38 points (–0.19%) to 6,075.11; the Dow Jones Industrial Average^® ($DJI) lost 248.33 points (–0.55%) to 44,765.71; and the NASDAQ Composite^® ($COMP) declined 34.85 points (–0.18%) to 19,700.26.
The 10-year Treasury note yield was unchanged at 4.18%.
The CBOE Volatility Index^® (VIX)inched up to 13.46.

A federal court has ruled that the beneficial ownership information (BOI) reporting requirements established by the Corporate Transparency Act (CTA) are unconstitutional¹ ² ³. The decision is currently under appeal¹.

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

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Filed under: "Ask-an-Advisor", "Doctors Only", Drugs and Pharma, Experts Invited, Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, Information Technology, Investing, Marcinko Associates, Recommended Books, Sponsors | Tagged: American Society Anesthesiologists, anesthesia billing, Anthem, ASA, CRNA, DJIA, DOW, health insuramce anesthesia, Marcinko, NASA, NASDAQ, S&P 500, textbooks, TNX, VIX, WSJ | Leave a comment »

COUNTDOWN: To End of Year BOI Reporting?

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

Beneficial Ownership Information

By Staff Reporters

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Small business owners face severe penalties if they don’t report to the federal government by year’s end. And, thousands of businesses may not realize they are subject to a new reporting process mandated under the Corporate Transparency Act, which went into effect in January 2024. Even lawyers, doctors, financial advisors and accountants are affected; along with “mom and pop”business owners.

For most eligible businesses, the filing deadline is Jan. 1, 2025, according to the U.S. Chamber of Commerce. “Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day,” the U.S. Chamber of Commerce website reads.

Businesses that meet the reporting criteria must submit a Beneficial Ownership Information Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), according to the U.S. Chamber of Commerce.

The law was created “to combat illicit activity including tax fraud, money laundering and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market,” the chamber website explained.

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MPFS Final Rule Cuts Physician Payments [Will it Last?]

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

By Health Capital Consultants, LLC

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On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released its finalized Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2025, aiming “to strengthen primary care, expand access to preventive services, and further access to whole-person care.” While the finalized fee schedule cuts payments to physicians, Congress is considering legislation to override the cut.

This Health Capital Topics article discusses the provisions contained in the MPFS final rule, as well as the proposed “doc fix” legislation. (Read more…)

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BOND YIELDS: Real and Negative Returns

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

DEFINITIONS

By Dr. David Edward Marcinko MBA MEd

Navigating Market Cycles: From Bulls to Nvidia – AI Edition

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Real Bond Yield: For most bonds and other fixed-income securities, real yield is simply the yield you see listed online or in newspapers minus the premium added to help counteract the effects of inflation. Most “nominal” fixed-income yields include an “inflation premium” that is typically priced into the yields to help offset the effects of inflation.

Real yields, such as those for TIPS, don’t have the inflation premium. As a result, TIPS yields and other real yields are typically lower than most nominal yields

Negative Bond Yield: In a normal bond market environment, bond yields are positive, and bond issuers (including governments) make interest payments to investors who lend them money.

In an abnormal, or negative-yield environment, investors essentially pay the bond issuer to hold their money.

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

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“FREE STUFF”: Powerfully Irrational

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

BEWARE THE PSYCHOLOGY OF HOLIDAY SHOPPING!

[Online -OR- Onground]

By Staff Reporters

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Power of Free

Who doesn’t love free stuff? The word “free” is like a magic spell that makes our rational minds go on vacation.

According to colleague Dan Ariely PhD, the power of free compels us to grab things we don’t need and make questionable choices. Why buy one and get one free when you can get two for the price of one? It’s the same deal, but free feels better.

IOW: Like other heuristics, the Power of Free is a mental shortcut that allows us to bypass rational thought and save effort to make quick decisions. Studies of the Power of Free have shown it to be closely linked to the Affect Heuristic. Specifically, it is linked to emotional and social thinking rather than transactional thinking. People become influenced by emotion and obligated to socially acceptable behaviors.

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

For example, say, a yoga studio charges extra to use their mats. This leads more people to pay the fee and use their mats for convenience. Then, say, the same yoga studio removed the extra fee more people would bring their mats from home instead of feeling guilty about borrowing one for class.

Removing a dollar value increases its inherent value and makes it more desirable. The type of product matters too. People are more likely to opt for a free product that is fun rather than functional. This is because emotion is more powerful than rational thinking under the influence of the Power of Free.

In another example, people are more likely to say “yes” to a free piece of cake or sample size of perfume than furniture polish or a bag of white flour.

So, next time you find yourself going to a free financial planning or retirement seminar with free dinner, or a free medical screening test, or free stock market portfolio review, just blame it on the irresistible and irrational power of free.

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Filed under: Ethics, Experts Invited, Glossary Terms, Health Economics, iMBA, Inc., LifeStyle, Marcinko Associates | Tagged: affect heuristic, cognitive bias, Dan Ariely PhD, decision-making, free, heuristics, irrational, Marcinko, power of free, psychology | Leave a comment »

PRESIDENT: Pardons Son Robert Hunter Biden

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

BREAKING NEWS!

By Staff Reporters

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President Joe Biden has just pardoned his son, Hunter Biden, who was convicted on federal gun charges and was due for sentencing in December, 2023.

Despite the White House’s assurances last month that the president had no intentions of pardoning his son, the announcement came through on Sunday evening that he had pardoned him.

READ: https://tinyurl.com/2hdpwrzj

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GOAL GRADIENTS: Motivational Theories

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

By Staff Reporters

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The Goal Gradient effect is the phenomenon where people accelerate their efforts as they approach a goal. It’s like a runner sprinting to the finish line.

According to colleague Dan Ariely PhD, our motivation peaks when we see the goal within reach, driving us to work harder and faster. Marketers use this by showing progress bars and loyalty rewards. Knowing about the goal gradient can help us set milestones and maintain motivation throughout our tasks.

So, break your big goals into smaller ones and watch your productivity soar as you get closer to each milestone.

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Filed under: "Doctors Only", Career Development, Ethics, Experts Invited, Glossary Terms, mental health | Tagged: Alderfer, Dan Ariely PhD, goal, goal gradient, Herzberg, human needs, McCelland, motivation, motivational theory | Leave a comment »

Record-Breaking Savings for ACOs in 2023

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

ACCOUNTABLE CARE ORGANIZATIONS

By Health Capital Consultants, LLC

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On October 29, 2024, CMS announced Performance Year (PY) 2023 results for accountable care organizations (ACOs) participating its Medicare Shared Savings Program (MSSP). Notably, MSSP ACOs garnered the largest net savings in MSSP’s history – more than $2.1 billion.

This Health Capital Topics article discusses MSSP performance in 2023 and how this may inform value-based care going forward. (Read more…)

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Small Business Saturday

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

By Staff Reporters

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Champion small businesses nationwide and #ShopSmall on Saturday, November 30th, 2024.

Now more than ever, small businesses need our support. Please join SBA and organizations across the country as they celebrate small business contributions to their communities by shopping at a small business on November 30th, Small Business Saturday.

Small Business Saturday was founded by American Express in 2010 and officially cosponsored by SBA since 2011. It is an important part of small businesses’ busiest shopping season.

In 2023, the reported projected spending in the U.S. from those who shopped at small businesses on Small Business Saturday was around $17 billion

Since 2010, the total reported U.S. spending at small businesses during the annual Small Business Saturday is an estimated $201 billion

Join the highly successful team of SBA, Women Impacting Public Policy (WIPP), and American Express in kicking off the 2024 holiday season. Support our nation’s more than 34 million independent businesses this Small Business Saturday and all holiday season long.

More: https://www.sba.gov/about-sba/organization/sba-initiatives/small-business-saturday

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Filed under: "Ask-an-Advisor", Experts Invited, Funding Basics, Glossary Terms, LifeStyle | Tagged: American Express, black Friday, Small Business Saturday, small-business, WIPP, Women Impacting Public Policy | Leave a comment »

NAVIGATING STOCK MARKET CYCLES: From Bulls to Nvidia [AI Edition]

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

By Viataliy Katsenelson CFA

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I’m embarking on something I’ve never done before—I’ve enlisted AI to inform, educate, and maybe even entertain you. I took several essays I wrote and asked my bestie AI to transform them into a radio show-style conversation between two hosts. (The AI tool I used is Notebook LM, a product created by Google.) I didn’t write the scripts myself.

Here were my instructions to the AI: “Here’s my essay. I’m taking a break from writing. Educate, inform and entertain my readers.” That’s it. If what you hear doesn’t surprise you—or even shock you to your socks—I don’t know what will. The future is here.

These essays are just as relevant today as when I first wrote them this summer. You can read the original of the first essay here. Be sure to leave your comments about the conversation you’re about to hear, and feel free to share it with friends, enemies, or even random strangers.

In this episode, my AI friends will discuss stock market math, sideways markets, the role of P/E in market cycles, impact of interest rates on P/E, economic analysis, Magnificent Seven stocks, NVIDIA, and a lot more.

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THANKSGIVING TURKEY: How Long to Cook the Bird?

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

By Staff Reporters

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ORDER: https://www.amazon.com/Dictionary-Health-Insurance-Managed-Care/dp/0826149944/ref=sr_1_4?ie=UTF8&s=books&qid=1275315485&sr=1-4

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Filed under: Experts Invited, LifeStyle | Tagged: good housekeeping, thanksgiving turkey, turkey, turkey cooking times, TURKEY: How Long to Cook? | Leave a comment »

SALARY PRIME NUMBERS: Financial Success by Generation

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

By Staff Reporters

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According to HVL from Morning Brew, a new survey from financial services company Empower ignited a conversation about what monetary success means. Turns out, it depends on who you ask. Boomers believe that success means having an annual salary of about $100,000. Gen Z thinks your mom can’t brag about you to her dentist until you earn $600k/year. On average, respondents said success is making $270,000 annually.

Additionally, less than 40% of respondents said they considered themselves financially successful. Almost 50% don’t believe they will achieve the level of success they desire.

But there was some good news: Forty-three percent said their idea of success didn’t depend on a specific sum of money. And almost 60% said happiness is most important, as long as happiness is defined as “being able to spend money on the things and experiences that bring the most joy.”

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THANKSGIVING: Donor Advised Funds

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

DONATION: In “Name” Only?

Staff Reporters

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Proponents of DAFs say that their structure encourages giving: The tax deduction encourages wealthy patrons to dedicate money for charity even before they’ve decided which cause to support. “Donors may have good reasons to postpone grants,” a Stanford Law School article says..

In one hypothetical, a tech founder who “sells a startup for millions of dollars” may want to donate her takings but is too busy to immediately decide how to direct the funds; a DAF is a good choice for this person, the law article notes.

However, while DAFs could in theory grow the charitable pie, in practice, they too often allow the donor the illusion of charity while letting them keep control of their funds, critics say.

While a gift to a DAF is treated the same as an outright gift to the Red Cross or United Way, in practice, it “effectively allows the donor to retain ongoing control over the charitable disposition and investment of the donated assets,” tax scholars Roger Colinvaux and Ray Madoff wrote in 2019. What’s more, “donors are under no obligation, and have no incentive, ever to release their advisory privileges to make the funds available for charitable use.”

And ultra wealthy donors get a substantially larger tax break than a middle-class worker. As much as 74 cents of every dollar given to charity comes back to the donor in the form of tax breaks, according to calculations by Colinvaux and Madoff, with the highest-earning donors getting the biggest benefits A person in the top tax bracket would save 37% of their federal income tax for every dollar they contribute with a charitable donation; a similar amount of state income tax; and, depending on what they donate and when, they can also avoid capital gains tax and estate tax. (By contrast, a typical worker who makes about $60,000 and doesn’t own stocks would save 22% from their cash contribution, in addition to any state tax savings.)

What’s more, because there’s no way to track donations from particular DAF accounts, they act as a form of “dark money,” allowing donors to give vast sums, essentially anonymously, to a range of potentially unsavory organizations, including nonprofits that advocate for specific political causes or organizations classified as hate groups, IPS says.

“This allows DAFs to be used to hide transfers — similar to the way the ultra-wealthy use multiple shell companies to hide the movement of money among offshore accounts,” IPS writes.

All of these strategies are completely legal, the IPS notes, as are other potentially questionable tactics used by family foundations—such as paying family members to serve as foundation trustees or act as executives of foundations, sometimes at salaries in the hundreds of thousands of dollars a year. However, the IPS argues, they erode public trust in charities and the tax system overall.

“The fact that billionaires opt out of paying taxes, have these closely held family foundations and get to play God about where the money goes, that’s private power — unaccountable private power,” Collins said.

“At this point philanthropy is at risk of becoming taxpayer-subsidized private power.”

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FIXED FINANCIAL SPREADS FOR PHYSICIANS: Duration, Sectors, Widening, Tightening and Other Fixed Income Strategies

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

DEFINITIONS FOR PHYSICIANS

By Dr. David Edward Marcinko MBA MEd

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Spread duration is a risk measure, expressed in years, that estimates the price sensitivity of a fixed income investment to a 100 basis point change in credit spreads relative to similar-maturity Treasuries.

Spread sectors (aka “spread products,” “spread securities”) in fixed income parlance, are typically non-Treasury securities that usually trade in the fixed income markets at higher yields than same-maturity U.S. Treasury securities. The yield difference between Treasuries and non-Treasuries is called the “spread”), hence the name “spread sectors” for non-Treasuries.

These sectors–such as corporate-issued securities and mortgage-backed securities (MBS–typically trade at higher yields (spreads) than Treasuries because they usually have relatively lower credit quality and more credit / default risk and / or they have more prepayment risk.

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

Spread widening, tightening are changes in spreads that reflect changes in relative value, with “spread widening” usually indicating relative price depreciation and “spread tightening” indicating relative price appreciation.

Spreads (aka “interest-rate spreads”, “maturity spreads,” “yield spreads” or “credit spreads”)

In fixed income parlance, spreads are simply measured differences or gaps that exists between two interest rates or yields that are being compared with each other. Spreads typically exist and are measured between fixed income securities of the same credit quality, but different maturities, or of the same maturity, but different credit quality.

Changes in spreads typically reflect changes in relative value, with “spread widening” usually indicating relative price depreciation of the securities whose yields are increasing most, and “spread tightening” indicating relative price appreciation of the securities whose yields are declining most (or remaining relatively fixed while other yields are rising to meet them). Value-oriented investors typically seek to buy when spreads are relatively wide and sell after spreads tighten.

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

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Filed under: "Ask-an-Advisor", Experts Invited, Financial Planning, Funding Basics, Glossary Terms, Investing, Marcinko Associates | Tagged: bonds, credit spreads, economy, finance, fixed income, interest rate spreads, Investing, Marcinko, maturity spreads, personal-finance, spread products, spread securities, spread tightening, spread widening, spreads, stocks, value investing, yield spreads, Yields | Leave a comment »

DAILY UPDATE: Health Insurance Affordability as Stock Markets Broadly Rise

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

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“

A Partner of the Institute of Medical Business Advisors , Inc.

SPONSORED BY: Marcinko & Associates, Inc.

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Daily Update Provided By Staff Reporters Since 2007.
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The Commonwealth Fund’s 2024 biennial health insurance survey, released November 21, found that though 79% of US adults had continuous health insurance for 12 months, 23% were under insured, meaning they have health insurance and still can’t afford care. About 56% of those surveyed had adequate insurance coverage all year.

STOCKS UP

Rocket Lab rocketed (sorry) 3.44% to a new record high after launching not one, but two different rockets in two different hemispheres in a single day.
Bath & Body Works soared 16.51% on a strong beat-and-raise quarter.
Robinhood jumped 3.27% after Morgan Stanley analysts doubled their price target for the investing app.
Super Micro Computer surged yet another 15.87%, more than doubling in the last seven days, and shareholders cheered its comeback.
Hims & Hers Health climbed 23.77% on the news that the new head of the FDA may be an ally.
Flying taxi company Vertical Aerospace popped 45.51% after announcing an additional $50 million in funding from one of its biggest shareholders.

STOCKS DOWN

Defense contractor stocks got a double whammy today: Hopes of a ceasefire between Israel and Hezbollah, combined with Elon Musk’s declaration on X that buying manned military aircraft is wasteful. Lockheed Martin fell 3.76%, Northrop Grumman dropped 2.39%, and Raytheon Technologies parent company RTX Corp. fell 1.74%.
Speaking of Musk, Tesla sank 3.96% after California announced it may exclude the automaker from incentives that encourage drivers to buy EVs in the state.
Pipeline operator Oneok lost 4.72% on the news that it will acquire the remaining portion of EnLink Midstream that it doesn’t already own.
After rallying last week thanks to its inclusion in the S&P 500, Texas Pacific Land sank 6.71% today as investors took profits.

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

Here’s where the major benchmarks ended:

The SPX rose 18.03 points (0.30%) to 5,987.37; the $DJI added 440.06 points (0.99%) to 44,736.57; and the NASDAQ Composite^® ($COMP) gained 51.18 points (0.27%) to 19,054.84.
The 10-year Treasury note yield fell 15 basis points to 4.27%.
The CBOE Volatility Index^®(VIX)dropped to 14.74, the lowest since November 14.