BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Stocks sank yesterday on news that Russian President Vladimir Putin lowered the threshold for using nuclear weapons, retaliation against the US for allowing Ukraine to use American-made long-range missiles. The NASDAQ and S&P 500 managed to recover, but the DJIA stayed all day in the red.
Treasury yields dropped as bonds rose.
Gold popped as traders sought safety, as the commodity benefited from the US dollar pulling back from a recent one-year high.
Bitcoin continued to climb slowly but surely, reaching another new all-time high.
A trader can gain by throwing away some of his/her initial endowment.
SAMPLE: There is an economy with two commodities (x and y) and two traders (e.g. Alice and Bob).
In one situation, the initial endowments are (20,0) and (0,10), i.e, Alice has twenty units of commodity x and Bob has ten units of commodity y. Then, the market opens for trade. In equilibrium, Alice’s bundle is (4,2), i.e, she has four units of x and two units of y.
In the second situation, Alice decides to discard half of her initial endowment – she throws away 10 units of commodity x. Then, the market opens for trade. In equilibrium, Alice’s bundle is (5,5) – she has more of every commodity than in the first situation.
The “throw away paradox” was first described by Robert J. Aumann and B. Peleg as a note on a similar paradox by David Gale.
Volatility indexes are forward-looking measures of the market’s expectations of volatility (or how much a stock index’s price moves). The CBOE manages and publishes three of the most widely used volatility indexes based on three major stock indexes:
The VIX Index tracks the expected 30-day future volatility of the S&P 500 Index.
The VXN Index tracks the expected 30-day future volatility of the NASDAQ-100 Index.
The VXD Index tracks the expected 30-day future volatility of the Dow Jones Industrial Average Index.
A Stop order, also known as a “stop-loss order,” a stop order is an order placed with a bank or brokerage firm to either buy or sell a security after it reaches a specified price. Once the price is reached, the stop order becomes a market order, meaning there is no guarantee that an order will be completely filled at the specified stop price.
A Stop-limit order is order placed with a bank or brokerage firm to buy or sell a fixed amount of an investment after it reaches a specified or better price, combining the features of a stop order and a limit order.
A stop-limit order requires investors to set two price points: the first initiates the stop (the order to buy or sell) and the second sets the limit, or price beyond which the investor would not like to buy or sell. The investor also sets a time frame for which the order is valid before being cancelled. If the investor’s price cannot be met during the specified time frame, the order will be cancelled.
Posted on November 19, 2024 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.
Stocks ended the day mixed, with the Dow sinking into the red while the S&P 500 and NASDAQ kicked off the week on a positive note thanks to gains from tech stocks.
Oil popped on a double-whammy of news: Long-range, US-made ballistic missiles launched from Ukraine into Russia might disrupt oil supply, while the shutdown of Norway’s Johan Sverdrup oil field due to a power outage will definitelydisrupt oil supply.
Crypto continued its hot streak today: Bitcoin popped back above $90,000, giving other cryptocurrencies a boost.
Bitcoin’s boom has certainly helped MicroStrategy, which announced today that it purchased 51,780 bitcoins for approximately $4.6 billion in cash, or roughly $88,627 per bitcoin, in the last week alone.
The new Trump Trade continues: The president-elect’s selection of Liberty Energy CEO Chris Wright to lead the Department of Energy gave Liberty a 4.85% boost today. Wright is also on the board of nuclear company Oklo, which popped 14.83%.
Netflix disappointed viewers with its glitchy showing of Jake Paul vs. Mike Tyson, but shareholders forgave the company after it announced record viewership of the fight. Shares climbed 2.80%.
CVS Health gained 5.41% on news that it struck a deal with activist investor Glenview Capital Management to add four new seats to its board.
Robinhood jumped 8.29% to a new all-time high thanks to an upgrade from Needham analysts giving the investing app a “buy” rating due to its crypto offerings under a pro-crypto Trump presidency.
Warner Bros. Discovery rose 2.71% on a Wall Street Journal report that it has settled its legal dispute with the NBA, guaranteeing broadcast rights for the next decade.
STOCKS DOWN
Nvidia isn’t often in this section of the newsletter, but the semiconductor leader sank 1.29% today on a report from The Information that its new Blackwell chips are prone to overheating.
Palantir popped after moving over to the Nasdaq last week, but the red-hot software stock dropped 6.86% as investors collected profits.
Redfin may help you buy a house, but the online real estate brokerage is a “sell,” according to Goldman Sachs. The Wall Street firm cited low home sales, low affordability, and low chances of success in a competitive market. Shares fell 4.42%.
Uber dropped 5.35% to a new 52-week low on the threat of Tesla’s robotaxis ruling the road thanks to a Trump administration that seems keen on cutting self-driving regulations.
The SPX was up 23.00 points (0.4%) to 5893.62; the Dow Jones Industrial Average® ($DJI) fell 55.39 points (0.1%) to 43,389.6; and the NASDAQ Composite®($COMP) was up 111.69 points (0.6%) to 18,791.81.
The 10-year Treasury note yield fell one basis point to 4.41%.
Posted on November 18, 2024 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.
Spirit Airlines said Monday it has filed for Chapter 11 bankruptcy protection after struggling with losses, growing debt and a failed merger during the post-pandemic travel lull. The company said in a stock market statement that it had secured a prearranged deal with bondholders that includes £300 million in financing to keep it afloat, with the business planning to end its bankruptcy in the first quarter of 2025.
Analysts are expectingNvidia, the world’s largest publicly traded company, to show quarterly sales of ~$33 billion, up 10% from the previous quarter and 83% year over year, but they also warn the mind-blowing growth of the chip maker could begin to slow.
Posted on November 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Dedicated short bias strategies short stocks expected to depreciate as a result of company-specific catalysts or falling markets. These strategies maintain a net short exposure to the equity market, seeking to reduce equity portfolio volatility and offer the potential to earn returns in falling equity markets. Of course, they may be challenged in periods of rising equity markets.
From Shorting to a Short Bias
Prior to the long-term bull market for U.S. equities that took place in the 1980s and 1990s, many hedge funds used a dedicated short strategy, rather than a dedicated short bias strategy.
The dedicated short strategy was one that exclusively took short positions. The dedicated short funds were virtually destroyed during the bull market, so the dedicated short bias fund emerged and took a more balanced approach. The long holdings are enough to keep losses manageable, although funds can still run into problems with leverage and capital flight if losses continue for too long.
Posted on November 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The income-related monthly adjustment amount (IRMAA) is a fee you pay on top of your Medicare Part B and Part D premiums if you make a yearly income above the annual thresholds.
Posted on November 16, 2024 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.
The Internal Revenue Service (IRS) ruled that employees at an unnamed company can designate a portion of their employer match to student debt repayments or health reimbursement accounts, in addition to their traditional 401(k).
Warren Buffett’s Midas touch gave a boost to Domino’sPizza and PoolCorp. after Berkshire Hathaway announced it has bought shares of both companies. Domino’s popped to start the day but dropped 1.27%, while Pool climbed just 0.54%.
Palantir is jumping ship, moving from the NYSE to the Nasdaq. Shareholders liked the move, pushing the stock up 11.14%.
Bloom Energy…bloomed 59.19% on the news that the renewable energy company reached an agreement to provide utility company American Electric Power with 1 gigawatt worth of fuel cells.
STOCKS DOWN
What Buffett giveth, Buffett taketh away: Apple sank on the news that Berkshire Hathaway has sold shares of the company, and almost completely eliminated its position in UltaBeauty. Apple fell 1.41%, while Ulta Beauty dropped 4.60%.
Shareholders were expecting the worst from Chinese online retailer Alibaba, and although the company actually beat earnings forecasts, it wasn’t enough—shares still sank 2.20%.
Applied Materials tumbled 9.20% after beating both top and bottom line expectations, but shareholders balked at the slowdown in several key businesses.
Here’s where the major stock market benchmarks ended:
The SPX fell 78.55 points (–1.32%) to 5,870.62 to end the week down 2.08%; the Dow Jones Industrial Average® ($DJI) lost 305.87 points (–0.70%) to 43,444.99 to end the week down 1.24%; and the NASDAQ Composite®($COMP) decreased 427.52 points (–2.24%) to 18,680.12 to end the week down 3.15%.
The 10-year Treasury note yield rose one basis point to 4.43% but added 12 basis points for the week. Shorter-term yields rose less.
The CBOE Volatility Index® (VIX) climbed sharply to 16.11 as stocks fell.
The problems at storied bond manager Western Asset Management keep growing. Clients have pulled about $55 billion from Wamco, as the division is known, since mid-August, representing about 15% of its assets. Franklin Templeton, its 77-year-old parent company and one of the largest asset managers in the U.S., recently reported its steepest quarterly outflows on record.
Visualize: How private equity tangled banks in a web of debt, from the Financial Times.
Social Proof is a subtle but powerful reality that having others agree with a decision one makes, gives that person more conviction in the decision, and having others disagree decreases one’s confidence in that decision.
This bias is even more exaggerated when the other parties providing the validating/questioning opinions are perceived to be experts in a relevant field, or are authority figures, like doctors, attorneys, financial advisors, teachers and/or people on television. In many ways, the short term moves in the stock market are the ultimate expression of social proof – the price of a stock one owns going up is proof that a lot of other people agree with the decision to buy, and a dropping stock price means a stock should be sold.
According to colleague Dan Ariely PhD, when these stressors become extreme, it is of paramount importance that all participants in the financial planning and investing process have a clear understanding of what the long-term goals are, and what processes are in place to monitor the progress towards these goals.
Without these mechanisms it is very hard to resist the enormous pressure to follow the crowd; think social media and related influences.
Convertible securities are those that can be converted at the investor’s choice into other investments, normally into shares of the issuer’s underlying common stock. Convertibles are typically issued as bonds or preferred stock.
Convertible bonds, which provide an ongoing stream of income, can be converted into a preset number of shares of the company’s common stock and have a maturity date. Unlike common stock, which pays a variable dividend depending on a corporation’s earnings, convertible preferred stock pays a fixed quarterly dividend. It can be converted into common stock at any time, but often are perpetual.
Corporate securities (corporate bonds and notes) are debt instruments issued by corporations, as distinct from those issued by governments, government agencies, or municipalities.
Corporate securities typically have the following features: 1) they are taxable, 2) they tend to have more credit (default) risk than government or municipal securities, so they tend to have higher yields than comparable-maturity securities in those sectors; and 3) they are traded on major exchanges, with prices published in newspapers.
Equity market neutral strategies seek to eliminate the risks of the equity market by holding up to 100% of net assets in long equity positions and up to 100% of net assets in short equity positions. These strategies attempt to exploit differences in stock prices by being long and short in stocks within the same sector, industry, market capitalization, etc. If successful, these strategies should generate returns independent of the equity market.
Equity market neutral portfolios have two key sources of return: 1) the Treasury Bill return (the interest on proceeds from short sales held in cash as collateral), and 2) the difference (the “spread”) between the return on the long positions and the return on the short positions. Stock picking, rather than broad market moves, should drive most of a market-neutral strategy’s total return (save for any return from the 100% cash position).
Extended Equity Strategies attempt to provide better returns than possible with long-only investments
An example of an extended equity strategy is a 130/30 portfolio, which gets its designation from taking a 130% long position and a 30% short position. In practice, this would mean $100mm invested in stocks that are viewed as attractive.
Next, the manager would borrow and sell short $30mm of unattractive stocks. Then the manager uses the proceeds from the short sale to buy an additional $30mm of attractive stocks. This results in a portfolio that has 130% long and 30% short exposure to stocks, or “extended” exposure to equities relative to a long-only, 100% stock portfolio.
Note: It’s important to point out that here is the risk of theoretical unlimited amount of loss with short selling, (i.e. the price of the short-sold stocks increases; the long position can only go down to $0).
Posted on November 14, 2024 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.
UnitedHealth Group posted nearly $6.1 billion in profit last quarter, edging out Elevance Health with $5.6 billion. Paige Minemyer has more takeaways from third quarter earnings results.
Cigna told investors the company is no longer pursuing a merger with Humana, opting to avoid tricky questions from federal regulators.
EV startup Rivian popped 13.71% after announcing a new $5.8 billion joint venture with Volkswagen to collaborate on a new line of vehicles that will begin rolling off the assembly line in 2027.
Rocket Lab…rocketed 28.44% to a new all-time high after increasing revenue 55% last quarter and announcing the first launch deal for its new Neutron rocket.
CharterCommunications will purchase LibertyBroadband in an all-stock deal. Charter shares rose 3.63% on the news, while Liberty shares sank 5.05%.
Cava reported strong earnings today, including impressive same-store sales growth of 18%. Shares soared on the open, though ended the day up just 1.57%.
Flutter Entertainment, parent company of sports betting app FanDuel, rose 6.89% to hit an all-time high thanks to incredibly strong betting on the NFL last quarter.
STOCKS DOWN
The problems continue at Super Micro Computer, which announced it will need EVEN MORE time to submit its quarterly 10-Q form to the SEC. That’s on top of the delayed filing of its annual 10-K filing from back in June—and if it doesn’t file that by November 16, the stock will be delisted from the Nasdaq. Shares sank 6.31%.
Spirit Airlinesreally may go bankrupt this time. The beleaguered airline has lost hope of merging with FrontierAirlines, so shares plunged 59.32%.
Maplebear, which is the parent company of Instacart, delivered bad news for shareholders: Next quarter will be worse than expected. Shares fell 11.01%.
SoundHoundAI reported record revenue last quarter, but shares plummeted 17.06% after the voice recognition stock also revealed much lower margins.
The S&P 500® index (SPX) rose 1.39 points (0.02%) to 5,985.38; the Dow Jones Industrial Average® ($DJI) added 47.21 points (0.11%) to 43,958.19; and the NASDAQ Composite®($COMP) fell 50.66 points (–0.26%) to 19,230.74.
The 10-year Treasury note yield added two basis points to 4.45%, just below last week’s four-month high.
The CBOE Volatility Index® (VIX) slid to 14.03, down sharply from above 20 early last week.
The Labor Department on Wednesday reported that consumer prices in October rose 2.6% from a year earlier. That marks a pickup in the pace of inflation from September, when prices were up 2.4% on the year.
A digital token inspired by a Shiba Inu dog meme is now worth more than the company that pioneered the assembly line. Yesterday, dogecoin continued its post-election surge to become more valuable than 121-year-old Ford.
Visualize: How private equity tangled banks in a web of debt, from the Financial Times.
Yield: For bonds and other fixed-income securities, yield is a rate of return on those securities. There are several types of yields and yield calculations. “Yield to maturity” is a common calculation for fixed-income securities, which takes into account total annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity.
Yield curve: A line graph showing the yields of fixed income securities from a single sector (such as Treasuries or municipals), but from a range of different maturities (typically three months to 30 years), at a single point in time (often at month-, quarter- or year-end). Maturities are plotted on the x-axis of the graph, and yields are plotted on the y-axis. The resulting line is a key bond market benchmark and a leading economic indicator.
Yield to maturity [real yield to maturity]: Yield to maturity is a common performance calculation for fixed-income securities, which takes into account total annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity. Real yield to maturity is simply yield to maturity minus any “inflation premium” that had been added/priced in. (See Real yield.)
Yield ratio: A ratio of one yield divided by another. Most often used as a relative value measurement.
Yield spread: A “spread,” in fixed income parlance, is simply a difference. Yield spreads measure yield differences, typically between debt securities with high credit ratings (which typically have lower yields) and those with lower ratings (which typically have higher yields). Yield spreads can also be measured between debt securities with different maturities (shorter-maturity securities typically have lower yields and longer-maturity securities typically have higher yields).
Yield trap: An investment that can lure investors with an attractive yield that may not be fundamentally sustainable, or that may lead to undesired price volatility. Yield traps can lurk in both the equity and fixed income markets. They have a tendency to prey on those who can least afford them, including retirement investors looking for increased relative income and stability, who may have been too focused on their income goals and not enough on stability.
Posted on November 13, 2024 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.
The operator of the longest-running money laundering machine in dark web history, Bitcoin Fog, has been sentenced to 12 years and six months in US prison. Roman Sterlingov, 36, a Russian-Swedish national, was also ordered to repay more than half a billion dollars accrued from the cryptocurrency mixing service that he ran for a decade between 2011 and 2021.
r Elliott Investment Management is at it again, this time with a $5 billion stake in industrial conglomerate Honeywell. Shares gained 3.87% on the news.
Shopify announced its ninth consecutive quarter of beating analyst revenue expectations, pushing shares up 21.04%.
Bad news is good news: 40% of the workforce at 23andMe is getting laid off to cut costs. Shareholders cheered, and shares climbed 2.17%.
Where’s the beef? Tyson Foods popped 6.55% after announcing strong earnings thanks to higher beef and chicken prices last quarter.
Sentinel One climbed 2.01% after Deutsche Bank analysts upgraded the cybersecurity stock from “hold” to “buy,” noting it should profit from CrowdStrike’s outage earlier this year.
Holding company IAC is considering a spinoff of home improvement services platform Angi (formerly Angie’s List). Nobody liked that: Shares of IAC fell 12.56%, and Angi plummeted 26.34%.
Payments processor Shift4 Payments sank 5.69% after crushing revenue expectations but missing on earnings.
Mosaic dropped 7.74% thanks to Hurricane Milton, which disrupted the fertilizer company’s business across the board.
The S&P 500® index (SPX) fell 17.36 points (–0.29%) to 5,983.99; the Dow Jones Industrial Average® ($DJI) lost 382.15 points (–0.86%) to 43,910.98; and the NASDAQ Composite®($COMP) decreased 17.36 points (–0.09%) to 19,281.40.
The 10-year Treasury note yield added 12 basis points to 4.43%.
The CBOE Volatility Index® (VIX) fell to 14.81, unusual on a day when stocks lost ground.
More than 20 years ago I crafted a comprehensive holistic financial plan for a young doctor colleague who was born in 1959. In fact, he was not even a medical student at the time; so “canned off-the-shelf plans”, computer generated software or generic spread sheets were not a viable creation option. It was all a granular, detailed, specific and cognitive work-product. Today, he is a board-certified internist.
So, in 2023, it is right and just to take a look back and see how well, or poorly, we’ve fared.
Now, I appreciate more than most how financial planning is a “process”; and not an isolated event. Yet, all sorts of “advisors” and “consultants” create and charge hefty fees for same, and on-going monitoring, every day.
The ME-P Challenge
Nevertheless, I challenge all you mid-career or senior financial planners /advisors to this competition; regardless of degree, certification or designation.
“Show me your financial plan” – AND – “I’ll show you my financial plan”
Here Comes the Judge
Then, our community of ME-P readers, subscribers, visitors and “judges” will decide the winner.
The contest is open to any financial advisor, planner, consultant, wealth manager, CFP®, CFA, insurance agent, CPA or CLU, ChFC, or stock-broker, etc., who is not afraid of transparency in his or her work product and purported expertise.
***[Creating and Evaluating a physician focused financial plan]
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Assessment
So, just send in a copy of any “blinded” physician-focused financial plan that is about 21 years old. We will post for all to see and review …. warts and all … including my own; three part mega-plan!
The winner will receive bragging rights, academic swagger, and expert promotion to our entire ME-P ecosystem and network of medical, business, law and graduate school communities; as well as physicians, nurses, healthcare executives and allied health care professionals.
An informed sought-after and lucrative sector – indeed!
IOW: Free publicity and positive “new-wave” PR – PRICELESS!
Of course, as an educator and professor of health economics and finance, we are pleased to present you with the deep medical business knowledge and detailed financial,managerial and accounting techniques used, with some real-life “tips and pearls” developed over the last two decades of R&D, right here:
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
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Posted on November 12, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Angus Deaton’s 1980s studies, including one called “Why is consumption so smooth?” gave birth to a concept called the Deaton Paradox — in short, sharp shocks to income didn’t seem to cause similarly large shocks to consumption.
IOW: Consumption varies surprisingly smoothly despite sharp variations in income.
According to David Henderson, this was an important development in understanding the actions of consumers, causing economists to rethink the “permanent income hypothesis” developed by Milton Friedman, which suggested that people spend based on their lifetime income.
And, Mike Bird wrote a good article on Deaton the highlighted the Nobel Prize in Economics Committee.
Posted on November 12, 2024 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.
The SPX rose 5.81 points (0.10%) to 6,001.35; the Dow Jones Industrial Average® ($DJI) added 304.14 points (0.69%) to 44,293.13, a new all-time closing high; and the NASDAQ Composite®($COMP) gained 11.99 points (0.06%) to 19,298.76.
The 10-year Treasury note yield (TNX) didn’t trade today due to the Veterans Day holiday.
The CBOE Volatility Index® (VIX) inched up to 15.05.
A paradox is a logic and self-contradictory statement or a statement that runs contrary to one’s expectation. It is a statement that, despite apparently valid reasoning from true or apparently true premises, leads to a seemingly self-contradictory or a logically unacceptable conclusion. A paradox usually involves contradictory-yet-interrelated elements that exist simultaneously and persist over time. They result in “persistent contradiction between interdependent elements” leading to a lasting “unity of opposites”.
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And so, as we plan for our financial future thru a New Year Resolution for 2025, it’s helpful to be cognizant of these paradoxes. While there’s nothing we can do to control or change them, there is great value in being aware of them, so we can approach them with the right tools and the right mindset.
According to Adam Grossman, here are seven [7] of the paradoxes that can bedevil financial decision-making, clients and financial advisors, alike:
There’s the paradox that all of the greatest fortunes—Carnegie, Rockefeller, Buffett, Gates—have been made by owning just one stock. And yet the best advice for individual investors is to do the opposite: to own broadly diversified index funds. More:https://tinyurl.com/285vftx4
There’s the paradox that the stock market may appear over valued and yet it could become even more overvalued before it eventually declines. And when it does decline, it may be to a level that is even higher than where it is today.
There’s the paradox that we make plans based on our understanding of the rules—and yet Congress can change the rules on us at any time, as the recent 2024 election results attest.
There’s the paradox that we base our plans on historical averages—average stock market returns, average interest rates, average inflation rates and so on—and yet we only lead one life, so none of us will experience the average.
There’s the paradox that we continue to be attracted to the prestige of high-cost colleges, even though rational analysis that looks at return on investment tells us that lower-cost state schools are usually the better bet.
There’s the paradox that early retirement seems so appealing—and has even turned into a movement—and yet the reality of early retirement suggests that we might be better off staying at our desks.
There’s the paradox that retirees’ worst fear is outliving their money and yet few choose the financial product that is purpose-built to solve that problem: the single-premium immediate annuity.
These are considered to be large developing economies that are part of a global, twenty-first century shift in economic power and influence away from the more established, traditional developed economies of the twentieth century.
The Sortino Ratio is similar to the Sharpe Ratio, it is a measure of risk-adjusted performance which looks at returns through the lens of the risk taken to achieve that performance, but instead of volatility of return, it uses downside variance as its measure of risk.
Derivatives are securities whose performance and/or structure is derived from the performance and/or structure of other assets, interest rates, or indexes. If used moderately and in appropriate situations, derivatives can help stabilize portfolios and/or enhance returns. However, if used in excess and/or in inappropriate circumstances, they can be harmful, potentially causing portfolio instability and/or losses. Derivatives are similar to medicine in their behavior–usually safe when used as directed, potentially toxic when abused.
There are many different types of derivative securities and many different ways to use them. Some derivative securities, such as mortgage-related and other asset-backed securities, are in many respects like any other investment, although they may be more volatile or less liquid than more traditional debt securities.
Futures and options are commonly used for traditional hedging purposes to attempt to protect portfolios from exposure to changing interest rates, securities prices or currency exchange rates, and for cash management purposes as a low-cost method of gaining exposure to a particular securities market without investing directly in those securities.
Certain other derivative securities may be described as structured investments. A structured investment is a security whose value or performance is linked to an underlying index or other security or asset class. Structured investments include collateralized mortgage obligations (CMOs). Structured investments also include securities backed by other types of collateral.
According to Wikipedia, a fundamental tenet of the paradox is that the customer, i.e. the potential purchaser of the information describing a technology (or other information having some value, such as facts), wants to know the technology and what it does in sufficient detail as to understand its capabilities or have information about the facts or products to decide whether or not to buy it. Once the customer has this detailed knowledge, however, the seller has in effect transferred the technology to the customer without any compensation. This has been argued to show the need for patent protection [HIPPA].
If the buyer trusts the seller or is protected via contract, then they only need to know the results that the technology will provide, along with any caveats for its usage in a given context. A problem is that sellers lie, they may be mistaken, one or both sides overlook side consequences for usage in a given context, or some unknown-unknown affects the actual outcome.
Stocks surged and stayed higher all yesterday day on news of Donald Trump’s presidential victory. The Dow rocketed over 1,350 points as soon as markets opened, and all three indexes ended the day at record highs.
Treasuryyields have paralleled Trump’s chances of taking the White House for the last few weeks, and his election sent them soaring to over 4.46% at one point today.
Oil and gold both fell as the dollar rose after Trump’s win. The greenback popped on the promise of Trump’s protectionist tariff policies and the lower likelihood of the Fed cutting interest rates as fast as previously expected.
Bitcoin surged as traders celebrated the beginning of the new, friendlier regulatory environment that Trump promised during his campaign.
Most doctors report feeling overworked and are considering a change in career, according to a new poll.
Doximity, a virtual network for physicians, found that 81% doctors surveyed last fall said they felt overworked—a slight decline from 86% who reported burnout in 2022 but still up from 73% in 2021. Meanwhile, about three in five doctors said they were considering early retirement (30%), looking for another employer (15%), or leaving the profession altogether (14%), the poll found.
The findings, released last year, come amid reports of rising rates of physician burnout and dissatisfaction since after the Covid-19 pandemic.
Posted on November 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The cocktail party effect is the ability of the human hearing and auditory system to focus one’s listening attention on a particular speaker in a noisy environment, such as a crowded party. This allows people to focus on a specific conversation while filtering out other nearby conversations and background noise.
Consider that you’re at a crowded party, noise everywhere, but you hear your name mentioned across the room. How? Welcome to the Cocktail Party Effect.
Your brain is like a highly trained butler, filtering out the background chatter to catch something personally relevant. It’s not just your name, either; it could be juicy gossip or a mention of free pizza or an exciting new stock tip you’ve been considering; or even an IPO.
So, according to psychologist colleague Dan Ariely PhD, this selective attention keeps us sane in a noisy world, helping us focus on the things that matter – like whether that person just said “free drinks” or “freeloading, or “free-stock trading.”
Posted on November 7, 2024 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.
One more group of stocks that soared on a Trump election: Big Tech companies with antitrust problems. Another Trump presidency should go a long way toward clearing up the regulatory hurdles many companies have faced recently, which is why Alphabet popped 3.99% and Amazon rose 3.8%.
CVS Health surged 11.33% after meeting revenue forecasts but missing earnings expectations. However, the miss was due to a one-time charge, so shareholders quickly forgave the healthcare retailer.
Planet Fitness gained 6.09% on a surprise bid for bankrupt fitness chain Blink Holdings in an attempt to bolster its own gym business.
Stocks Down
Super Micro Computer had a chance to show the world it wasn’t committing the fraud it has recently been accused of. Instead, the company announced it is still unable to determine when it will file the quarterly report due August 29. Shares crashed 18.05%.
Home builder stocks sank on fears that a Trump presidency will slow the rate of Fed rate cuts, keeping mortgage rates higher for longer. DR Horton fell 3.8%, Lennar dropped 4.84%, PulteGroup lost 3.09%, and TollBrothers tumbled 1.46%.
Cannabis stocks were betting big on a ballot measure in Florida to allow the sale of recreational marijuana. The initiative’s failure sent shares of Curaleaf plummeting 29.17%, TrulieveCannabis plunged 38.8%, and AyrWellness sank 55.87%.
The S&P 500®index (SPX) rose 146.28 points (2.53%) to 5,929.04; the Dow Jones Industrial Average® ($DJI) added 1,508.05 points (3.57%) to 43,729.93; and the NASDAQ Composite®($COMP) gained 544.29 points (2.95%) to 18,983.47—a new closing high.
The 10-year Treasury note yield (TNX) surged 14 basis points to 4.43%, its highest level since July.
The CBOE Volatility Index® (VIX) fell sharply to 16.3 as election-related uncertainty diminished.
Similar in ways to the availability heuristic (Tversky & Kahneman, 1974) and to some extent, the false consensus effect, once you (truly) 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: the curse of knowledge.
However, according to colleague Dan Ariely PhD, it is often an unfair assumption that others share the same knowledge. 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.
I should have seen it [divorce, stock market crash/soar my smoking & lung cancer, unemployment, etc] coming!
Retained Earnings Risk: Profits generated by a company that are not distributed to stockholders as dividends. Instead, they are either reinvested in the business or kept as a reserve for specific objectives, such as paying off debt or purchasing equipment. Retained earnings risks are also called “undistributed profits,” “undistributed earnings,” or “earned surplus.”
Risk-Weighted (or risk-adjusted) Assets: Within the context of measuring the financial stability of banks and other financial institutions, the risk-weighted assets figure is an aggregate of a financial institution’s assets (usually loans to its customers) after the loans have been individually adjusted for their risk. This involves multiplying each loan by a factor that reflects its risk. Low-risk loans are multiplied by a low number, high-risk by high. The aggregate number can then be used to calculate the financial institution’s capital ratio. Lower risk-weighted assets typically result in higher capital ratios, and higher risk-weighted assets usually translate to lower capital ratios.
Sequence-of-Returns Risk: The risk of market conditions impacting the overall returns of an investment portfolio during the period when a retiree is first starting to withdrawal money from investments as income. For example, if a retiree has to withdrawal income from his or her portfolio when market prices are depressed, the portfolio may lose out on the potential returns that income could have made once market prices recovered.
Posted on November 6, 2024 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.
First-time homebuyers in 2024 had a median income of $97,000, and their median age was 38. OpenAI and Jeff Bezos invested in Physical Intelligence, a robot startup with the aim of “bringing general-purpose AI into the physical world.”
Cybersecurity darling Palantir soared 23.38% to a record high thanks to strong earnings, high AI demand, and big spending from the Department of Defense.
Astera Labs skyrocketed 37.70% after the semiconductor parts maker (and one of Nvidia’s key suppliers) announced strong earnings.
Crypto stocks had a great day thanks to a widespread cryptocurrency rally. Coinbase rose 4.13%, MicroStrategy gained 2.16%, and RiotPlatforms jumped 8.13%.
Stocks Down
Trump Media & Technology Grouparrested its recent downturn and popped 12% at one point today, but gave all those gains up and ended the day down 1.16%.
You’d think the end of a multi-week labor dispute costing billions of dollars would be a relief for shareholders, but Boeing still sank 2.62% on news that it’s reached an agreement with striking machinists.
It’s a me, lower revenue forecasts! Nintendo fell 1.68% after announcing that sales of its Switch console are starting to sag.
Some of the smaller semiconductor stocks on the market took a beating today. NXP Semiconductor dropped 5.17% after announcing weaker-than-expected Q4 guidance, Lattice Semiconductor tumbled 1.37% after missing on sales forecasts and announcing job cuts, and while Cirrus Logic beat expectations this quarter, it still fell 7.09% on lower forecasts.
The S&P 500®index (SPX) rose 70.07 points (1.23%) to 5,782.76; the Dow Jones Industrial Average® ($DJI) added 427.28 points (1.02%) to 42,221.88; and the NASDAQ Composite®($COMP) increased 259.19 points (1.43%) to 18,439.17.
The 10-year Treasury note yield (TNX) dropped two basis points to 4.29%.
The CBOE Volatility Index® (VIX) slipped to 20.72.
Classic: Investment purchases and private expenditures of healthcare firms, the value of related construction, and the change in inventory during the year.
Modern: Gross Revenue Per Day is the average amount charged by a hospital for one day of inpatient care (gross inpatient revenue divided by patient-census days).
Gross Revenue Per Discharge: The average amount charged by a hospital to treat an inpatient from admission to discharge (gross inpatient revenue divided by discharges).
Gross Revenue Per Visit: The average amount charged by a hospital for an outpatient visit (gross outpatient revenue divided by outpatient visits).
Posted on November 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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After its AI-related earnings disappointed Wall Street last quarter, Big Tech doubled down in the latest period:
Amazon spent $22.6 billion on property and equipment like data centers and chips. That’s an 81% spike from the same time last year.
Meta raised its low-end guidance for capex (capital expenditures), which could reach $40 billion by the end of the year. It beat earnings estimates, even with AR glasses subsidiary Reality Labs costing $4.4 billion in operating losses.
Apple is still betting on Apple Intelligence to boost sales. Most revenue came from the new iPhone 16, Apple Watch, and AirPods, but Apple services like TV+ and iCloud also grew massively to account for a quarter of the business.
Google crushed earnings estimates and revealed that more than 25% of all new code it writes is generated by AI (and reviewed by engineers).
Posted on November 5, 2024 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.
Among consideration for CVS is splitting up its assets: CVS Pharmacy, pharmacy benefit managerCVS Caremark, and insurance arm Aetna. The company has reportedly been in talks with bankers about the move, Reuters reported early this month.
Just as Nvidia will replace Intel, Sherwin Williamswill replaceDow Inc. on the Dow (how embarrassing, getting kicked off an index you share a name with). Sherwin Williams popped 4.59%, while Dow Inc. fell 2.08%.
Peloton pedaled 3.59% higher on a double upgrade from Bank of America analysts, who like the bike company’s higher profit outlook and hiring of new CEO Peter Stern from Ford.
Yum! China, the company that operates Pizza Hut and KFC restaurants in China, climbed 7.12% after announcing that new store openings translated into better-than-expected revenue and earnings last quarter.
STOCKS DOWN
Nuclear energy stocks took a big hit today after the Federal Energy Regulatory Commission ruled that Talen Energycould not increase the amount of energy its nuclear plant in Susquehanna, PA, produces in order to power an Amazon data center. Talen fell 2.23%, Vistra Corp sank 3.18%, and Constellation Energy plummeted 12.46%.
Clinical data from a Viking Therapeutics trial shows its weight-loss pill is effective. Shares soared then sank 13.36% as investors took profits.
The S&P 500®index (SPX) dipped 16.11 points (–0.28%) to 5,712.69; the $DJI dropped 257.59 points (–0.61%) to 41,794.60; and the $COMP lost 59.93 points (–0.33%) to 18,179.98.
The 10-year Treasury note yield (TNX) fell five basis points to 4.31%.
The CBOE Volatility Index® (VIX)edged up to 22.11, still below last week’s peaks.
Named for a U.S. economist, the JB Taylor Rule is a mathematical monetary-policy formula that recommends how much a central bank should change its nominal short-term interest rate target (such as the U.S. Federal Reserve’s federal funds rate target) in response to changes in economic conditions, particularly inflation and economic growth. It’s typically viewed as guideline for raising short-term interest rates as inflation and potentially inflationary pressures increase. The rule recommends a relatively high interest rate (“tight” monetary policy) when inflation is above its target or when the economy is above its full employment level, and a relatively low interest rate (“easy” monetary policy) under the opposite conditions.
To illustrate, the monetary policy of the FOMC, changed throughout the 20th century. The period between the 1960s and the 1970s is evaluated by Taylor and others as a period of poor monetary policy; the later years typically characterized as stagflation. The inflation rate was high and increasing, while interest rates were kept low. Since the mid-1970s monetary targets have been used in many countries as a means to target inflation.
However, in the 2000s the actual interest rate in advanced economics, notably in the US, was kept below the value suggested by the Taylor rule.
HFRI: Fund of Funds invests with multiple managers through funds or managed accounts. The strategy designs a diversified portfolio of managers with the objective of significantly lowering the risk (volatility) of investing with an individual manager.
The Fund of Funds manager may allocate funds to numerous managers within a single strategy, or with numerous managers in multiple strategies. The investor has the advantage of diversification among managers and styles with significantly less capital than investing with separate managers.
Posted on November 2, 2024 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.
Ford paused production of its F-150 Lightning electric truck from mid-November to early January as demand for the once-coveted EV dwindles.
Peloton named Peter Stern, the co-founder of Apple Fitness+, as its next CEO.
Starbucksis bringing back Sharpied names on cups for the first time in four years as new CEO Brian Niccol tries to shake up the struggling coffee chain.
Boeing offered striking machinists yet another new contract offer, including a 38% pay raise over the next four years. The union will vote on the contract on Monday. Shares climbed 3.54%.
Avis Budget motored 10.92% higher despite missing forecasts on both earnings and revenue. Shareholders celebrated the rental car company’s strong growth expectations from management and took advantage of a cheap valuation.
Globalstar rocketed 32.38% after the satellite communications company announced an expanded deal with Apple.
Charter Communications soared 11.87% after losing fewer subscribers than expected, which is like a back-handed compliment in the investing world.
STOCKS DOWN
Trump Media & Technology Group remains on the roller coaster, falling another 13.53% today as early exit polls show Vice President Kamala Harris with a lead in several key states.
Wayfair may have met earnings expectations last quarter, but the online home goods retailer also lost customers and fulfilled fewer orders. Shares fell 6.26%.
Super Micro Computer continued to sell off after the resignation of its financial auditor, an almost-sure sign of fraud. Shares sank another 10.51%.
The S&P 500®index (SPX) rose 23.35 (0.41%) to 5,728.80 to end the week down 1.37%; the Dow Jones Industrial Average® ($DJI) added 288.73 points (0.69%) to 42,052.19 to end the week down 0.15%; and the NASDAQ Composite®($COMP) gained 144.76 points (0.80%) to 18,239.92 to end the week down 1.50%.
The 10-year Treasury note yield (TNX) climbed eight points to 4.36%, the highest since early July.
The CBOE Volatility Index® (VIX)remained elevated at 21.88.
Posted on November 1, 2024 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.
Comcast popped 3.39% on the news that it is exploring a separation of its cable business. The network operator got a boost this quarter from the Olympics, but still lost 365,000 cable TV customers.
Peloton Interactive pedaled 27.82% higher after the bike maker beat earnings expectations and introduced a new CEO.
Carvana accelerated 19.23% on an impressive beat-and-raise earnings report that caps off the car seller’s incredible comeback.
Booking Holdings, owner of Kayak and Priceline, hit a record high after the travel company reported shockingly strong earnings. Shares rose 4.76%
What was down
Trading in shares of Trump Media & Technology Group was halted yet again today after the meme stock sank dramatically to start the day. Shares ended the trading session down 11.72%.
Estee Lauder plummeted 20.84% on a triple whammy of bad news: The cosmetics retailer missed earnings estimates, pulled its forecast, AND cut its dividend. Ouch.
Super Micro Computer continued to tumble today, declining another 11.97% as the fallout from the resignation of its financial auditor raises the threat of the semiconductor stock getting delisted from the Nasdaq.
eBay sank 8.18% after beating earnings expectations but issuing disappointing earnings guidance heading into the holiday season.
The SPX fell 108.22 (–1.86%) to 5,705.45; the Dow Jones Industrial Average® ($DJI) dropped 378.08 points (–0.90%) to 41,763.46; and the NASDAQ Composite®($COMP) lost 512.78 points (–2.76%) to 18,095.15 and has now fallen in two of the last four months.
The 10-year Treasury note yield (TNX) added two basis points to 4.28%.
The VIX rose to 22.6, the highest since October 8.
What Is CREDIT? Credit is a contractual agreement in which a borrower receives a sum of money or something else of value and commits to repaying the lender later, typically with interest. Credit is also the creditworthiness or credit history of an individual or a company. Good credit tells lenders you have a history of reliably repaying what you owe on loans. Establishing good credit is essential to getting a loan.
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Credit Analysis is a form of financial analysis used primarily to determine the financial strength of the issuer of a security, and the ability of that issuer to provide timely payment of interest and principal to investors in the issuer’s debt securities. Credit analysis is typically an important component of security analysis and selection in credit-sensitive bond sectors such as the corporate bond market and the municipal bond market.
Credit Default Swap Index (CDX) is a credit derivative, based on a basket of CDS, which can be used to hedge credit risk or speculate on changes in credit quality.
Credit Default Swaps (CDS) are credit derivative contracts between two counter parties that can be used to hedge credit risk or speculate on changes in the credit quality of a corporation or government entity.
Credit Quality reflects the financial strength of the issuer of a security, and the ability of that issuer to provide timely payment of interest and principal to investors in the issuer’s securities. Common measurements of credit quality include the credit ratings provided by credit rating agencies such as Standard & Poor’s and Moody’s. Credit quality and credit quality perceptions are a key component of the daily market pricing of fixed-income securities, along with maturity, inflation expectations and interest rate levels.
Credit Rating Agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In the United States, the Securities and Exchange Commission (SEC) permits investment banks and broker-dealers to use credit ratings from “Nationally Recognized Statistical Rating Organizations” (NRSRO) for similar purposes. As of January 2012, nine organizations were designated as NRSROs, including the “Big Three” which are Standard and Poor’s, Moody’s Investor Services and Fitch Ratings.
A Credit Rating Downgrade by a credit rating agency (such as Standard & Poor’s, Moody’s or Fitch), of reducing its credit rating for a debt issuer and/or security. This is based on the agency’s evaluation, indicating, to the agency, a decline in the issuer’s financial stability, increasing the possibility of default (defined below). A downgrade should not to be confused with a default; a debt security can be downgraded without defaulting. (And, conversely, a debt issuer can suddenly default without being downgraded first–credit ratings and credit rating agencies are not infallible.)
Credit Ratings are measurements of credit quality provided by credit rating agencies). Those provided by Standard & Poor’s typically are the most widely quoted and distributed, and range from AAA (highest quality; perceived as least likely to default) down to D (in default). Securities and issuers rated AAA to BBB are considered/perceived to be “investment-grade”; those below BBB are considered/perceived to be non-investment-grade or more speculative.
Credit Risk is the risk that the inability or perceived inability of the issuers of debt securities to make interest and principal payments will cause the value of those securities to decrease. Changes in the credit ratings of debt securities could have a similar effect.
Credit Risk Transfer Securities (CRTS) are the unsecured obligations of the GSEs (Government Sponsored Enterprises). Although cash flows are linked to prepays and defaults of the reference mortgage loans, the securities are unsecured loans, backed by general credit rather than by specified assets.
Investors waited for the Magnificent 7 stock reports to begin rolling last evening. The NASDAQ rose to a new high on optimism while the Dow Jones fell, and the S&P 500 split the difference.
Alphabet announced earnings after the bell yesterday, Microsoft and MetaPlatforms reveal their latest quarters today, Amazon and Apple on Thursday afternoon.
The 10-year Treasury yield hit a 4-month high this afternoon before paring back a bit as traders struggle to find a signal in all the market noise.
Oil rebounded a bit from yesterday’s terrible day, though it still ended the trading session lower.
Posted on October 30, 2024 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.
Trump Media & Technology Group rocketed higher at the opening bell, prompting the Nasdaq to halt trading on what has quickly become the meme stock du jour. Shares ended the day 8.76% higher.
23andMe clawed 1.86% higher after introducing three new board members about a month after the entire board resigned.
VF Corp, parent company of clothing brands JanSport, Vans, and North Face, surged 27.01% thanks to an impeccable earnings report that revealed its turnaround plans are coming to fruition.
Trex, the stuff your dad built an awesome deck out of, saw sales fall last quarter but still managed to beat earnings expectations. Shares popped 6.19%.
STOCKS DOWN
JetBlue Airways sank 17.08% in spite of reporting a smaller loss than analysts expected. The problem is all the turbulence that lies ahead.
D.R. Horton is the largest homebuilder by market cap, so when it says that 2025 will be a bad year, investors should listen. Shares dropped 7.29% on the news.
Crocs stumbled 19.17% after beating earnings but announcing that its fiscal year would be bogged down by poor sales of its HeyDude shoe brand.
Stanley Black & Decker fell 8.77% after missing on both profits and sales, citing weaker consumer spending.
Xerox plummeted 17.41% after the company that can’t make a printer that works for longer than 3 months without needing a new ink cartridge announced weaker sales than expected.
The S&P 500® index (SPX) rose 9.40(0.16%) to 5,832.92; the Dow Jones Industrial Average® ($DJI) fell 154.52 points (–0.36%) to 42,233.05; and the $COMP added points 145.55 (0.78%) to 18,712.75.
The 10-year Treasury note yield (TNX) finished unchanged at 4.27% after reaching nearly 4.34% earlier today.
It is a multi-factor model measures the overall risk associated with a security relative to the market. And, it incorporates over 40 data metrics, including earnings growth, share turnover and senior debt rating.
The five most valuable US companies in the S&P 500 report earnings this week, and updates on three key economic indicators are set to be released: 1. gross domestic product, 2. inflation, and 3. jobs report. Then, next week brings the election and another expected rate cut from the Federal Reserve.
Markets:All three stock indexes rose to start a week that will be filled with high-stakes data.
Stock spotlight: Trump Media & Technology Group gained almost 22% on Monday, following the former president and current GOP candidate’s Madison Square Garden rally. The rose means that Trump Media, which includes Truth Social, is now more valuable than Elon Musk’s X.
Russell 1000® Growth Index: Measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Index: A market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell 1000® Value Index: Measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell 2000® Growth Index: Measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell 2000® Index: Market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell 2000® Value Index: Measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell 2500™ Growth Index: Measures the performance of those Russell 2500 Index companies (the 2,500 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell 2500™ Index: A market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,500 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell 2500™ Value Index: Measures the performance of those Russell 2500 Index companies (the 2,500 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell 3000® Growth Index: Measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 3000® Index: Measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 3000® Utilities Index: A sub-index of the Russell 3000 Index, is a capitalization weighted index of companies in industries heavily affected by government regulation, including among others, basic public service providers (electricity, gas and water), telecommunication services, and oil and gas companies.
Russell 3000® Value Index: Measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.
Russell Midcap® Growth Index: Measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell Midcap® Index: Measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell Midcap® Value Index: Measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell Top 200® Index: Measures the performance of the 200 largest securities of the 3,000 publicly traded U.S. companies in the Russell 3000® Index, based on total market capitalization. It is not an investment product available for purchase.
Posted on October 28, 2024 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.
401(k) vs. pension: There’s pros and cons to both. While pension plans guarantee a steady income stream, payments sometimes aren’t indexed by inflation, which can erode their value over time. On the flip side, 401(k)s are subject to market fluctuations and require financial literacy.
It’s good to have money stashed in the stock market when the market is doing well. The number of people with at least $1 million in their 401(k) and IRA accounts jumped 12% in the second quarter 2024, according to a report from Fidelity Investments, largely tracking the market’s gain during that period. It’s the third straight quarter of growth in $1+ million accounts and close to a record high.
But start saving now, because building a hard-boiled nest egg through retirement accounts takes time: The average age of a 401(k) millionaire is 59, Fidelity said.
Posted on October 27, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katenselson CFA
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Today, we’re diving into two thought-provoking questions:
1. What’s a famous investment rule I don’t agree with? 2. Which key characteristics should a good investor have?
1. 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, which I’ll discuss next; but holding, not selling, a stock is a decision.
2. Key Characteristics of a Good Investor
I’m going to sound a bit more preachy than usual, but it’s very difficult to answer this question in any other way.
You need three Ps – passion, patience, process.
Passion
Investing is not a 9-to-5 job; it’s a 24/7 adventure. Unlike flipping burgers or processing insurance claims, where you can clock in at 9 AM, fall into a stupor, and then reawaken at 5 PM when you clock out.
This should be your test: If you catch yourself treating investing as a 9-to-5 job, then you have little passion for it.
If this is the case, don’t do it (this probably applies to any choice of a profession). You don’t stand a chance against people for whom investing is a never-ending puzzle to be solved on their life’s journey. All of my investment friends are dripping with passion for investing; they are obsessed with it. None of them are in it only for the money.
You won’t last long in this profession if you’re not passionate about stocks. Patience
Investing is like real life – the connection between effort and result is nonlinear. It is very loose.
You may be making all of the right rational decisions: You are buying stocks that lie within your EQ/IQ spectrum, and they are significantly undervalued, but the market simply doesn’t care. It just keeps sending your stocks down. To make things even more frustrating, while your stocks are declining, speculators who treat the stock market as a craps table at Caesars Palace are killing it, making money hand over fist. It’s painful. It is excruciatingly painful if you have the wrong client base.
This is where patience comes in. My father told me this story, which happened right before I was born.
My family lived in Murmansk, a city 125 miles north of the Arctic Circle in northwest Russia. My mom went to give birth to my brothers and me in Saratov, a city in central Russia, about 1200 miles from Murmansk. She wanted to be closer to her parents. My father could not leave work, so he stayed in Murmansk.
A few weeks before I was born, he went to visit his best friend, Alexander. He told him that he was worried about my mom and the birth. His friend told him something that I remember to this day (with a chuckle): “Naum, you did your part; you cannot go back and correct what you did. Now you just have to wait.”
Investing is patience punctuated by decisions.
As the French mathematician Blaise Pascal said, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”
One more thought here: I try to take the temperature of my emotions and the mental activity of my brain. When I find myself overheating, with the stock market occupying my entire brain, I forcibly disconnect and unplug myself from it. The quality of my thoughts and decisions when my brain is overheating is likely to be low. So, I go for a walk in the park, read a fiction book, go see a movie, or visit an art museum. Process
Managing someone else’s money is an incredible responsibility, which you may not fully appreciate during bull markets. But sideways and bear markets will remind you quickly.
I don’t want to over-glorify what we do – we are not curing cancer or saving people from burning buildings. But IMA clients entrust us with their life savings and tell me, “Vitaliy, please don’t screw it up.”
My decisions may determine whether our clients get to retire, pay for their medical expenses, or help their kids buy houses.
Staying rational when the world around you is melting up with greed or melting down in fear isn’t a capacity that one accidentally stumbles upon. You engineer it through a series of small, repeatable decisions – your investment process.
Posted on October 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
“What is good for the goose is good for the gander”
By Rick Kahler CFP®
There is an old adage that says, “What is good for the goose is good for the gander.”
In today’s urbanized world, most of us probably wouldn’t have the slightest idea what’s good for geese. Yet we still know that this saying reminds us to be cautious about anyone who makes recommendations they don’t follow themselves.
This is especially important when it comes to investment advice.
Duopoly
Have you ever wondered how your investment advisor invests their money? Have you wondered if the agent selling you cash value life insurance as a retirement investment is investing their retirement in the same? Or whether an advisor recommending a specific mutual fund, stock investment, or bond issue buys the same for their own portfolio?
Ask
My suggestion is to stop wondering and ask. I rarely have a client or prospective client ask me whether I invest my own money in the same way I invest the funds of clients. Most people think it is just too personal to ask how an advisor is investing their own funds and that the advisor may take offense.
Yet knowing how anyone offering investment advice to you invests their own funds is highly relevant. It’s especially wise to ask this if someone is trying to sell you on an “exciting opportunity” that sounds too good to be true. An evasive or vague answer is an obvious red flag. But even with a fiduciary advisor, I believe asking how they invest their own money is a legitimate question. I for one am happy to answer it. Yes, the investment vehicles and strategies I recommend for clients are the same ones I use for myself.
If an advisor is recommending a strategy or investment for you that they don’t subscribe to or invest in themselves, then it’s a good idea to ask another question.
Why not?
Certainly, there are good reasons why an advisor would not have the same asset allocation that they recommend for you. They may be significantly younger or older, or they may have a significantly more aggressive or adverse tolerance for risk. But if your advisor outsources your investments to SEI but uses Vanguard for themselves, I would want to explore that. Or if your advisor is about the same age as you are, but has a significantly different asset allocation and uses none of the investments she recommends that you invest in, I would want to know why.
If an advisor suggests that you put 35% of your investment funds into a private REIT but they don’t own a private REIT, what’s the reason? Or if they are recommending you own a managed futures limited partnership but they don’t own that same partnership or any managed futures funds. Or, maybe they are recommending the A shares of an actively managed mutual fund but themselves purchase passively managed institutional shares.
If you don’t feel comfortable or knowledgeable enough to ask questions like these about specific investments, it’s still important to find out about an advisor’s broader approach to investing. Do they recommend that you “buy and hold,” yet they actively time the market with their own portfolio? Or maybe they actively trade your portfolio while following a “buy and hold” strategy themselves.
Assessment
While portfolio specifics might vary, I want any investment advisor to buy into the same investment philosophy they are recommending to me. If they are going to be timing the market with my funds, I want them to be making the same market moves with their own funds.
If a “sauce” isn’t good enough for the advisor personally, it isn’t good enough to recommend to clients.
Conclusion
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Posted on October 26, 2024 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.
The SPX fell 1.74 points (–0.03%) to 5,808.12 to end the week down 0.96%; the $DJI lost 259.96 points (–0.61%) to 42,114.40 to end the week down 2.68%; and the $COMP rose 103.12 points (0.56%) to 18,518.61 to end the week up 0.16%.
The 10-year Treasury note yield (TNX) added three basis points to 4.23%.
The CBOE Volatility Index® (VIX) climbed sharply to 19.95, nearing recent highs. The 20 level is an area to watch next week, as it traditionally signals more volatile markets.
Pick a direction already: On Wednesday, Spirit Airlines soared 30% on news of a possible merger with Frontier. On Thursday, shares plunged 21% as investors took their profits. Today, shares are back up 15.05% after Spirit announced it will cut jobs and sell planes in an effort to boost profits.
Texas Roadhouse sizzled like a porterhouse T-bone, rising 3.58% after announcing that earnings rose 32% last quarter.
Deckers Outdoor popped 10.57% thanks to soaring demand for Hoka shoes, helping the footwear company beat earnings estimates and raise forecasts.
Newell Brands may not be a household name, but they make household goods like Sharpies, Elmer’s Glue, and Crock-Pot—all things that people bought a ton of last quarter, which is why shares soared 21.59% today.
Apple is just fine, thanks: The Market Cap King got a rare analyst downgrade from KeyBanc, which is worried about lower demand from China. Shareholders were unfazed, and the stock rose 0.36%.
STOCKS DOWN
AutoNation hasn’t shaken off the aftereffects of a major cyberattack in July just yet, which is why revenue and earnings both missed estimates last quarter. Shares fell 4.46% today.
Colgate-Palmolive announced a beat-and-raise quarter, but it wasn’t enough to impress shareholders, who pushed the consumer staples giant down 4.14%.
Mohawk Industries was the worst-performing stock on the market at one point today, falling 13.70% after the flooring manufacturer reported disappointing earnings and lowered its fiscal forecast.
Online education company Coursera got an F from shareholders after the company lowered its revenue guidance for the full fiscal year. Shares dropped 9.83%.
Newmont had its worst day in over a decade yesterday after the gold miner reported shockingly bad earnings, with higher costs offsetting the rising price of gold. Shares continued to fall 1.69% today.
Posted on October 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
***
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.
Applications to MBA programs are up 12% in 2024 after declining for two years, according to the Graduate Management Admission Council, which surveys business school admissions offices.
Apple and Goldman Sachs were ordered to pay $89 million by the Consumer Financial Protection Bureau for failing to address thousands of consumer disputes of Apple Card transactions.
Apple is cutting production of Vision Pro due to slow sales. The tech giant is scaling down production of its $3,500 Vision Pro VR headset and might halt assembly of new ones next month,
UPS delivered a strong earnings report, with revenue beating analyst expectations for the first time in two years. Shares popped 5.28%.
ServiceNow rose 5.41% to a new all-time high thanks to a beat-and-raise third-quarter earnings report powered by higher AI demand for the enterprise software company.
Whirlpool climbed 11.20% after announcing solid earnings and reiterating guidance for the rest of the fiscal year, reassuring worried shareholders.
Molina Healthcare soared 17.67% after beating both top and bottom line estimates in the third quarter, thanks to the health insurer reaping the rewards of higher Medicaid payouts.
STOCKS DOWN
IBM dropped 6.17% on disappointing third-quarter results, missing on both top and bottom line forecasts thanks to lower consulting and infrastructure revenue.
Peloton pedaled higher yesterday after Greenlight Capital’s David Einhorn declared that the company was undervalued while he was pedaling on a Peloton. The stunt only worked for a quick sprint, though, with shares back down 2.07% today.
TKO Group Holdings got hit with a piledriver after the owner of the WWE and UFC announced it is acquiring several entertainment companies, including Professional Bull Riders. Investors bucked shares off 8.69%.
Keurig Dr. Pepper fizzled 4.80% thanks to lower sales last quarter, though the company is trying to bolster revenue by acquiring energy drink maker Ghost.
Air taxi startup Lilium crashed 61.50% on the news that its main subsidiaries have run out of cash and are filing for insolvency.
The S&P 500® index (SPX) rose 12.44 points (0.21%) to 5,809.86; the $DJI fell 140.59 points (–0.33%) to 42,374.36; and the NASDAQ Composite® ($COMP) added 138.83 points (0.76%) to 18,415.49.
The 10-year Treasury note yield fell four basis points to 4.20%.
The CBOE Volatility Index® (VIX) was about flat at 19.18.
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