BLACK FRIDAY: Profiting From “Reverse Supply Chain Logistics”

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

By Staff Reporters

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Black Friday, one of the biggest shopping days of the year, is a half day for the stock market. Both stock exchanges close at 1:00 p.m. ET, with eligible options trading until 1:15 p.m. Normal trading hours resume on the Monday after Thanksgiving, also known as Cyber Monday, when many online retailers host major sales.

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DEFINITION: Reverse logistics—or the supply-chain processes of returns—is a little-known but rapidly growing sector of the economy that’s booming alongside the rise in online shopping that started during the pandemic.

Now, as retailers crack down on returns to avoid hearing another “it was broken when I got it” excuse, some companies are counting on you to send your holiday gifts back. A “reverse logistics” industry has sprung up in recent years to take advantage of the more than $300 billion in returns Americans make every holiday season.

Venture capital firms pumped nearly $200 million into reverse logistics startups last year—over 2.5x as much as in 2021, according to Bloomberg.
Loop Returns, which sells software to companies looking to streamline the return process on the customer side, raised $115 million at the end of 2022.

Established companies see potential in reverse logistics as well. Last year, Uber launched a feature enabling drivers to pick up your packages and bring them to a returns center. Meanwhile, UPS, whose returns business has grown 25% since 2020, recently acquired the startup Happy Returns.

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INDEX: Li Keqiang

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

By Staff Reporters

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The Li Keqiang Index was created by The Economist and measure’s China’s economy using three indicators: railway cargo volume, electricity consumption and bank loans.

According to Wikipedia and a leaked US State Department Memorandum, Li Keqiang (then the Chinese Communist Party Committee Secretary of Liaoning) told a US ambassador in 2007 that the GDP figures in Liaoning were unreliable and that he himself used the three other indicators: [1] railway cargo volume, [2] electricity consumption and [3] bank loans

The “Keqiang index” is also used by Haitong Securities released in 2013, suggesting decelerating China’s economic growth since the beginning of 2013

The index is seen as an alternative to official gross domestic product numbers released by the Chinese government.

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DAILY UPDATE: “Black” Friday?

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

By Staff Reporters

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Black Friday is a colloquial term for the Friday after Thanksgiving in the United States, that is the Friday after 28th November. It traditionally marks the start of the Christmas shopping season in the United States. Many stores offer highly promoted sales at discounted prices and often open early, sometimes as early as midnight or even on Thanksgiving. Some stores’ sales continue to Monday (“Cyber Monday“) or for a week (“Cyber Week“).

Occurring on the fourth Friday in November unless November 1st is a Friday (in which case it’s the fifth Friday), Black Friday has routinely been the busiest shopping day of the year in the United States since 2005.

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Securities Industry and Financial Markets Association (SIFMA)

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

CLOSINGS TODAY ON THANKSGIVING 2024

By Staff Reporters

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United States stock markets will be closed on Thursday, November 28th and will close early on Friday, November 29th in observance of the Thanksgiving Holiday.

The NASDAQ and NYSE will both be closed on Thanksgiving and will open on November 29th, but close early at 1 p.m. ET. The U.S. bond market will also be closed on Thursday and are scheduled to close at 2 p.m. ET on Friday, according to the The Securities Industry and Financial Markets Association (SIFMA)..

After closing for the Thanksgiving holiday, and closing early on Black Friday, it will be business as usual on Wall Street until late December. The next scheduled stock market closure is on Wednesday, December 25th in observance of Christmas. Markets are also scheduled to close early on Christmas Eve

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DAILY UPDATE: Intel, Tether as Technology Markets Lead Downturn

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

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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HAPPY THANKSGIVING DAY 2024

Intel and the US government finalized a $7.9 billion grant from the CHIPS and Science Act that will help fund factory construction.

The cryptocurrency Tether is being used by organizations linked to Mexican drug cartels to launder tens of millions of dollars, 404 Media reported.

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STOCKS UP

Unusual Machines got an unusually strong boost today, soaring 84.51% after Donald Trump Jr. announced he’s joining the drone maker’s advisory board.
Ambarella continued to climb another 5.89% today after the semiconductor company announced a strong beat-and-raise quarter.
Urban Outfitters isn’t just where you go to buy overpriced beanies—it’s also where you go for strong holiday revenue expectations. Shares rose 18.31% after the retailer’s best third quarter ever.
SolarEdge Technologies will close its energy storage division and lay off hundreds of employees to cut costs. Shares popped 8.55% on the announcement.
Iris Energy jumped 29.71% after the bitcoin miner announced it’s growing so quickly that it may be able to distribute funds to shareholders sooner than previously thought.

STOCKS DOWN

Symbotic plummeted 35.86% after the robotics company announced it won’t meet its financial filing deadline thanks to some accounting errors.
Dell may have impressed with its AI offerings, but earnings came up short last quarter. That, plus management’s “meh” forecast for the coming quarter, sent shares tumbling 12.25%.
HP sank 11.36% after it, too, projected worse-than-expected profits next quarter.
Keeping the trend alive, cybersecurity company CrowdStrike also anticipates lower earnings next quarter—a sign that it still hasn’t fully recovered from this summer’s massive IT outage. Shares dropped 4.59%.
Nordstrom actually beat earnings expectations and announced a solid sales forecast—but apparently, it wasn’t good enough. The retailer still lost 8.09% today.

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Here’s where the major benchmarks ended:

The SPX fell 22.89 points (–0.38%) to 5,998.74; the Dow Jones Industrial Average^® ($DJI) lost 138.25 points (–0.31%) to 44,722.06; and the NASDAQ Composite^® ($COMP) dropped 115.10 points (–0.60%) to 19,060.48.
The 10-year Treasury note yield dropped six basis points to 4.24%, a one-month low close.
The CBOE Volatility Index^® (VIX)was close to flat at 14.14.

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

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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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The NASDAQ, S&P 500, Dow and Treasury Yields Rise as Oil & Bitcoin Fall

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

By Staff Reporters

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The S&P 500 and NASDAQ stayed in the green all day, with the S&P 500 hitting yet another new all-time high, while the Dow clawed its way out of negative territory to reach a new high as well.
The minutes from the last Federal Reserve meeting revealed that central bankers feel rate cuts are still warranted, though they’ll need to be gradual. Treasury yields rose on the news.
Oil fell after Israel and Lebanon agreed on a ceasefire deal.
Bitcoin continues to fall further away from the promised land of $100,000 as traders begin logging off ahead of the holiday—though bulls believe this is just a pullback to gather momentum ahead of the final push.

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CONVERSATIONAL “Switch Tracking” Ad Argumentum

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

By Staff Reporters

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Switch Tracking is the art of changing the focus of an argument or conversation to another topic. It’s like sleight of hand for your words. When the discussion gets uncomfortable, switching tracks can divert attention and defuse tension. Politicians are masters of this, skillfully shifting topics to avoid tough questions.

According to psychologist and colleague Dan Ariely PhD, while it can be a useful tactic, be aware when it’s being used on you. Stay focused on the main issue, and don’t let switch tracking derail your conversation.

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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.

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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.

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ILLUSORY: Correlation

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

CORRELATION IS NOT CAUSATION

By Staff Reporters

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According to colleague Dan Ariely PhD, Illusory Correlation is the perception of a relationship between variables when none exists. It’s like thinking that carrying an umbrella causes it to rain. Our brains are pattern-seeking machines, often connecting dots that aren’t actually connected. This bias can lead to superstitions and incorrect beliefs.

The illusory correlation occurs when someone believes that there is a relationship between two people, events, or behaviors, even though there is no logical way to connect them. The illusory correlation fools us into believing stereotypes, superstitions, old wives’ tales, and other silly ideas. Sometimes, the perceived connection between two events is harmless. It’s silly to think that a certain number always brings you luck. But forming these connections is completely normal. To avoid illusory correlations, rely on data and evidence rather than anecdotal observations.

So always remember: correlation does not imply causation, no matter how convincing it seems.

More: https://medicalexecutivepost.com/2024/06/05/correlation-is-not-causation/

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CONTRAST EFFECT: Cognitive Bias

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

FOR FINANCIAL ADVISORS

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Sensation, emotion and cognition work by Contrast Effect [cognitive bias].

Now, such perception is not only on an absolute scale, it also functions relative to prior stimuli. This is why room temperature water feels hot when experienced after being exposed to the cold. It is also why the cessation of negative emotions “feels” so good.

Cognitive bias functioning also works on this principle. So one’s ability to analyze information and draw conclusions is very much related to the context with in which the analysis takes place, and to what information was originally available. This is why it is so important to manage one’s own expectations as well as those of a financial advisor’s or stock broker’s clients.

For example, a client is much more likely to be satisfied with a 10% portfolio return if they were expecting 7% than if they were hoping for 15%.

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BID/ASK SPREAD: Basis Points with Formulas

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

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

DEFINITIONS

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Basis Points are used in financial literature to express values that are carried out to two decimal places (hundredths of a percentage point), particularly ratios, such as yields, fees, and returns. Basis points describe values that are typically on the right side of the decimal point–one basis point equals one one-hundredth of a percentage point (0.01%). So 25 basis points equals 0.25%, and 50 basis points equals 0.50%.

Only when basis points equal or exceed 100 does the value move to the left of the decimal point–100 basis points equals 1.00%, 500 basis points equals 5.00%, etc.

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

Bid/Ask Spread (also known as bid/offer spread) is the difference between the National Best Bid and the National Best Offer, which represents the implied cost to trade a security.

As compensation for the risk taken, the market maker (or dealer) earns the bid/offer spread in exchange for facilitating the trade. Wider spreads generally indicate higher costs associated with trading the underlying assets in the ETF, hedging costs, inventory management costs, and general market risk.

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PHYSICIAN FINANCIAL FEAR: Money Anxiety & Chrometophobia

Posted on November 24, 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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If you’ve found yourself worrying about the stock market or money lately, you definitely have company. Money anxiety, also called financial anxiety, has become more common than ever after the presidential election of November 2024.

In fact, the American Psychological Association’s 2022 Stress in America Survey, 87 percent of people who responded listed inflation as a source of significant stress. The rise in prices for everything from fuel to food has people from all backgrounds worried, today. The researchers say, in fact, that no other issue has caused this much stress since the survey began in 2007.

When money and financial concerns cause ongoing stress in your life, you could eventually begin to experience some feelings of anxiety as a result. This anxiety can, in turn, have a negative impact on your quality of life.

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Chrometophobia, commonly known as fear of money, is a psychological condition characterized by overwhelming anxiety and avoidance of currency; according to colleague Dan Ariely PhD.

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Physician Financial Fear is probably the most common emotion among physicians. The fear of being wrong – as well as the fear of being correct! It can be debilitating, as in the corollary expression on fear: the paralysis of analysis.

According to Paul Karasik, there are four common investor and physician fears, which can be addressed by financial advisors and psychologists in the following manner:

Fear of making the wrong decision: ameliorated by being a teacher and educator.
Fear of change: ameliorated by providing an agenda, outline and/or plan.
Fear of giving up control: ameliorated by asking for permission and agreement.
Fear of losing self-esteem: ameliorated by serving the client first and communicating that sentiment in a positive manner.

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BONDS: Tobacco

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

By Staff Reporters

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Tobacco bonds are a form of municipal debt securities and securitized debt whose payment obligations are tied to a master medical lawsuit settlement agreement between 46 states and several major U.S. tobacco companies.

In exchange for the states settling their lawsuits against the tobacco industry for recovery of tobacco-related health care costs and exempting the tobacco companies from private tort liability regarding harm caused by tobacco use, the companies agreed to curtail or cease certain tobacco marketing practices and to pay, in perpetuity, various annual payments to the states to compensate for the medical costs of tobacco-related illnesses.

These tobacco industry payments have been securitized into municipal bonds. One underlying risk, among others, is that if certain conditions are met, the tobacco companies may reduce or suspend part of their payments.

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DAILY UPDATE: Bitcoin, MicroStrategy and Credit Card Competition as the DJIA Hits a Record

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

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Bitcoin jumped about 130% this year, but MicroStrategy has skyrocketed almost 500%.

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The proposed Credit Card Competition Act (CCCA) could devastate credit card rewards at the national level if passed. Now, states are getting involved too Read on.

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STOCKS UP

Ross Stores rose 2.19% after beating earnings estimates but missing sales forecasts last quarter, with shoppers spending less thanks to inflation.

MicroStrategy tumbled big time yesterday after a short seller report highlighted the risk inherent in betting it all on bitcoin, but the stock recovered 6.19% today.
Super Micro Computer continues to recover from the brink of defeat, rising another 11.62% as investors beg the tech company’s forgiveness for ever doubting it.
Data analytics company Elastic sprang 14.77% higher today on a strong earnings report highlighted by rising demand from customers building AI applications.

STOCKS DOWN

Tax-filing company Intuit sank 5.68% after reporting strong earnings last quarter but forecasting weaker results this quarter.

Reddit dropped 7.18% after a one-two punch from shareholders: Tencent Holdings sold a chunk of its stake in the social media company, while Advance Magazine Publishers is selling its stake but, through some financial trickery, is keeping control of the shares.
Palo Alto Networks may have beaten earnings expectations yesterday afternoon, but the cybersecurity stock fell 3.61% after shareholders weren’t impressed by its full-year guidance.

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Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 20.63 points (0.35%) to 5,969.34 to end the week up 1.68%; the $DJI gained 426.16 points (0.97%) to 44,296.51 to end the week up 1.96%; and the NASDAQ Composite^® ($COMP) added 31.23 points (0.16%) to 19,003.65 to end the week up 1.73%.
The 10-year Treasury note yield fell two basis points to 4.41% and is down two basis points for the week, while the 2-year note yield rose seven basis points this week as rate cut odds fell.
The CBOE Volatility Index^® (VIX)fell sharply to 15.31 and finished slightly lower for the week.

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MORTGAGE BACKED SECURITIES: Prepayment Risk

Posted on November 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

DEFINITION

By Staff Reporters

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Prepayment risk is typically used in reference to mortgage-backed securities. It refers to the risk that mortgage refinancing activity might increase when market interest rates decline, which is generally not favorable for MBS investors.

For example, when homeowners refinance their mortgages, MBS investors are “prepaid,” shortening the life of their investments and forcing investors to reinvest the proceeds under lower interest rate conditions than what were most likely prevailing at the time of the original MBS investment.

Price adjustments for prepayment risk are one factor that helps explain why MBS, despite their generally high credit quality, have higher yields than comparable-maturity Treasury securities.

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AMA: Bye-Bye Medicare Billing Codes?

Posted on November 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Robert F Kennedy Jr, who was selected by Donald Trump to run the U.S. health and human services department, is working on plans to rid the American Medical Association from its role in drawing up Medicare’s billing codes, which sets doctors’ fees for more than 10,000 procedures, Oliver Barnes of The Financial Times reports.

The plan would result in an upheaval of a system that has been in place for decades. Publicly traded companies in the healthcare space include CVS Health (CVS), Centene (CNC), Cigna (CI), Elevance Health (ELV), Humana (HUM), Molina Healthcare (MOH) and UnitedHealth (UNH).

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The TIPPING POINT: Meanings Vary

Posted on November 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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A “Tipping point” has slightly varied meanings depending upon the field of study, but is frequently defined as a series of small changes in an evolutionary process that ultimately lead to a significant change or point beyond which new circumstances and conditions obtain.

For example, the point at which emerging economies go from being a long-time source of deflation to a source of inflation can be said to be an inflationary tipping point.

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The Tipping Point: How Little Things Can Make a Big Difference is the debut book by Malcolm Gladwell, first published by Litttle, Brown in 2000. Gladwell defines a tipping point as “the moment of critical mass, the threshold, the boiling point.” The book seeks to explain and describe the “mysterious” sociological changes that mark everyday life. As Gladwell stated: “Ideas and products and messages and behaviors spread like viruses do.”

Examples of such changes in his book include the rise in popularity and sales of Hush Puppies shoes in the mid-1990s and the steep drop in New York City‘s crime rate after 1990.

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DAILY UPDATE: Google and Ford Motor as Stock Markets Rise and Broaden

Posted on November 22, 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“

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The DOJ asked a judge to force Google to sell its Chrome browser, following his ruling that Google maintained an illegal monopoly in search.
Ford said it is cutting 4,000 jobs in Europe, about 14% of its workforce on the continent, citing weak demand for EVs and competition from Chinese cars.

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

STOCKS UP

Data analytics firm Snowflake soared 32.71% after posting impressive earnings, including a 28% increase in revenue last quarter.
BJ’s Wholesale Club has had an okay year, but its latest earnings report gave shareholders plenty to cheer. The big news: BJ’s is increasing its membership fee for the first time in seven years. Shares rose 8.24%.
Despite the fact that the world’s largest farming equipment manufacturer sees a big slowdown ahead, Deere beat earnings estimates last quarter, which was enough to help shares climb 8.12%.

STOCKS DOWN

It took a second, but it’s finally registering that Alphabet may be forced by the Department of Justice to divest its popular Chrome browser. Shares fell 4.74% as investors digest this stark reality.

Speaking of search engines, Baidu sank 5.90% after the Chinese tech stock missed analyst estimates on both earnings and revenue last quarter.
Speaking of Chinese companies, PDD Holdings, parent company of online retailer Temu, reported higher earnings and revenue last quarter—but it still fell short of analyst forecasts. Shares dropped 10.64%.
Speaking of struggling retailers, Beyond Inc., the company that owns Bed, Bath & Beyond and Overstock.com, was supposed to invest $40 million into struggling retailer The Container Store. Unfortunately for both, the deal fell through. Shares of Beyond sank 2.87%, while The Container Store dropped 9.79%.

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

Here’s where the major benchmarks ended:

The SPX buoyed 31.60 points (0.53%) to 5,948.71; the Dow Jones Industrial Average^® ($DJI) rose 461.88 points (1.06%) to 43,870.35; and the NASDAQ Composite^® ($COMP) stayed relatively flat, up 6.28 points (0.03%) to 18,972.42.
The 10-year Treasury note yield added two basis points to 4.42%, staying rangebound.
The CBOE Volatility Index^® (VIX) slipped to 16.87, still above last week’s levels.

CITE: https://tinyurl.com/tj8smmes

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

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INVESTMENT: Management Strategies

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

By Staff Reporters

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Active investment management strategies are the opposite of passive investment strategies. Active portfolio managers regularly take investment positions that clearly differ from those of the portfolio’s performance benchmark, with the objective of outperforming the benchmark over time.

Passive: https://medicalexecutivepost.com/2024/06/09/active-or-passive-investing-pursuits/

In addition to the upside potential of outperforming the benchmark, there’s also the downside possibility of under performing the benchmark. In an efficient market, there should be roughly the same magnitude of out performers and under performers for any given benchmark. But, markets are not always efficient.

Active non-transparent investment management strategies are Exchange Traded Funds that are actively managed by a portfolio manager or team of managers without daily disclosure of portfolio holdings. Active transparent strategies are daily disclosures of portfolio holdings as an attribute of traditional index-based Exchange Traded Funds (ETFs). Active transparent exchange traded funds are actively managed by a portfolio manager or team of managers. As with index-based ETFs, their portfolio holdings are disclosed daily.

Di-Worsification: https://medicalexecutivepost.com/2024/04/09/what-is-financial-portfolio-di-worsification-2/

NOTE: Absolute return as an investment vehicle seeks to make positive returns by employing investment management techniques that differ from traditional mutual funds. Absolute return investment techniques include using short selling, futures, options, derivatives, arbitrage, leverage and unconventional assets.

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ABSURDISM versus NIHILISM

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

By Staff Reporters

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Absurdism is the philosophical idea that life is inherently meaningless, but we should embrace the absurdity and create our own meaning. Think of it as existentialism’s quirky cousin. It’s like laughing at the cosmic joke instead of crying over spilled milk. Absurdism encourages us to find joy in the randomness and chaos of life.

So, according to colleague Dan Arily PhD, the next time you’re feeling overwhelmed by the lack of purpose, channel your inner absurdist and find humor in the absurdity of it all.

Nihilism, on the other hand, is the belief that all values are baseless and that nothing can be known or communicated. It is often associated with extreme pessimism and a radical skepticism that condemns existence. A true nihilist would believe in nothing, have no loyalties, and no purpose other than, perhaps, an impulse to destroy. While few philosophers would claim to be nihilists, nihilism is most often associated with Friedrich Nietzsche who argued that its corrosive effects would eventually destroy all moral, religious, and metaphysical convictions and precipitate the greatest crisis in human history.

In the 20th century, nihilistic themes–epistemological failure, value destruction, and cosmic purposelessness–have preoccupied artists, social critics and philosophers, alike. Mid-century, for example, the existentialists helped popularize tenets of nihilism in their attempts to blunt its destructive potential. By the end of the century, existential despair as a response to nihilism gave way to an attitude of indifference, often associated with anti-foundationalism.

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GROSSMAN-STIGLITZ: Financial Information Paradox

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

By Staff Reporters

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The Grossman-Stiglitz Paradox was introduced by Sanford J. Grossman and Joseph Stiglitz in a joint publication in American Economic Review in 1980 that argues perfectly informationally efficient markets are an impossibility since, if prices perfectly reflected available information, there is no profit to gathering information, in which case there would be little reason to trade and markets would eventually collapse.

IOW: According to colleague Eugene Schmuckler PhD MBA CTS, the Grossman-Stiglitz paradox is the inability to recoup the cost of obtaining market information and thus implies that efficient markets cannot exist.

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CHARGE MASTER: Medical Bills Paradox

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

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

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CHARGE MASTER MEDICAL BILLS

Classic Definition: A comprehensive review of a physician, clinic, facility, medical provider or hospital’s charges to ensure Medicare billing compliance through complete and accurate HCPCS/CPT and UB-92 revenue code assignments for all items including supplies and pharmaceuticals. The charge master captures the costs of each procedure, service, supply, prescription drug, and diagnostic test provided at the hospital, as well as any fees associated with services, such as equipment fees and room charges

Modern Circumstance: A charge master quizlet (charge description master [CDM]) document that contains a computer-generated list of procedures, services, and supplies with charges for each. Charge master rates are essentially the health care market equivalent of Manufacturer’s Suggested Retail Price (MSRP) in the car buying market. Poor charge master maintenance can lead to overpayments or underpayments. It can also lead to claim rejections from insurance companies, poor patient experience, or compliance violations.

Paradox Examples:

Superbills: An encounter form that is the financial record source document used by healthcare providers and other personnel to record treated diagnoses and services rendered to the patient during the current encounter. It is also called a superbill.
Payment rates: Almost no one actually pays the publicized charge master rates. The vast majority of health care consumers are represented by a payer of some kind, such as a commercial health insurance company, Medicaid, or Medicare. Commercial insurers negotiate the actual prices they pay during the process of contracting with providers. Medicare and Medicaid establish their own payment levels independent of hospitals’ charge master lists – Medicare through the federal government and Medicaid through state governments.
Cash pay: The sad irony of the charge master is that the uninsured are the most likely to be billed charge master rates because they are not represented by a third-party payer.
Problematic features: Other items also impede the ability of payers to have a comprehensive and accurate understanding of hospitals’ financial positions. For example, nonprofit hospitals are required to report charity care, bad debt expenses, community benefit initiatives, and uncompensated care. When these expenses are reported at the charge master level, expenses can be paradoxically overstated, potentially making a hospital’s financial position look worse than it actually is.

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PARADOX: Throw Away Endowment

Posted on November 19, 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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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.

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CBOE: Chicago Board Options Exchange [Volatility Indexes]

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

By Staff Reporters

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RELATED DEFINITIONS

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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.

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

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SECURITY ORDERS: Stop-Loss and Stop-Limit

Posted on November 19, 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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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.

MORE: https://medicalexecutivepost.com/2024/08/30/stock-orders-positions-doctors-should-know/

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.

MORE: https://medicalexecutivepost.com/2024/08/07/about-securities-order-and-position-types/

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.

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

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The Decline Bias [Declinism]

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

By Staff Reporters

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You may have heard the complaint that the internet, blogs, vlogs and social media will be the downfall of information dissemination; but, Socrates reportedly said the same thing about the written word.

Declinism refers to a bias in favor of the past over and above “how things are going.” Similarly, you might know a member of an older generation who prefaces grievances with, “Well, back in my day” before following up with how things are supposedly getting worse.

The decline bias may result from something before — we just don’t like change. People like their worlds to make sense, they like things wrapped up in nice, neat little packages.

Our world is easier to engage in when things make sense to us. When things change, so must the way in which we think about them; and because we are cognitively lazy (Kahenman, 2011; Simon, 1957), we try our best to avoid changing our thought processes.

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GAMIFICATION: Motivation and Achievement

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

By Staff Reporters

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Gamification is the application of game-design elements in non-game contexts to motivate and engage people. It’s like turning life into a video game with points, badges, and leader boards. This approach leverages our love for games and competition, making mundane tasks more enjoyable.

According to Dan Ariely PhD, whether it’s a fitness app tracking your steps or a learning platform rewarding your progress, gamification taps into our natural desire for achievement and recognition.

So, the next time you find yourself hooked on a task, thank the power of gamification for making it fun.

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STOCK POSITION SIZING: How to Construct Investment Portfolios That Protect You

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

By Vitaliy Katsenelson CFA

For a while in the value investing community the number of positions you held was akin to bragging on your manhood– the fewer positions you owned the more macho an investor you were.

I remember meeting two investors at a value conference. At the time they had both had “walk on water” streaks of returns. One had a seven-stock portfolio, the other held three stocks. Sadly, the financial crisis humbled both – the three-stock guy suffered irreparable losses and went out of business (losing most of his clients’ money). The other, after living through a few incredibly difficult years and an investor exodus, is running a more diversified portfolio today.

Under-diversification is dangerous, because a few mistakes or a visit from Bad Luck may prove to be fatal to the portfolio.

On the other extreme, you have a mutual fund industry where it is common to see portfolios with hundreds of stocks (I am generalizing). There are many reasons for that. Mutual funds have an army of analysts who need to be kept busy; their voices need to be heard; and thus their stock picks need to find their way into the portfolio (there are a lot of internal politics in this portfolio).

These portfolios are run against benchmarks; thus their construction starts to resemble Noah’s Ark, bringing on board a few animals (stocks) from each industry. Also, the size of the fund may limit its ability to buy large positions in small companies.

There are several problems with this approach. First, and this is the important one, it breeds indifference: If a 0.5% position doubles or gets halved, it will have little impact on the portfolio. The second problem is that it is difficult to maintain research on all these positions. Yes, a mutual fund will have an army of analysts following each industry, but the portfolio manager is the one making the final buy and sell decisions. Third, the 75th idea is probably not as good as the 30th, especially in an overvalued market where good ideas are scarce.

Then you have index funds. On the surface they are over-diversified, but they don’t suffer from the over-diversification headaches of managed funds. In fact, index funds are both over-diversified and under-diversified. Let’s take the S&P 500 – the most popular of the bunch. It owns the 500 largest companies in the US. You’d think it was a diversified portfolio, right? Well, kind of. The top eight companies account for more than 25% of the index. Also, the construction of the index favors stocks that are usually more expensive or that have recently appreciated (it is market-cap-weighted); thus you are “diversified” across a lot of overvalued stocks.

If you own hundreds of securities that are exposed to the same idiosyncratic risk, then are you really diversified?

Our portfolio construction process is built from a first-principles perspective. If a Martian visited Earth and decided to try his hand at value investing, knowing nothing about common (usually academic) conventions, how would he construct a portfolio?

We want to have a portfolio where we own not too many stocks, so that every decision we make matters – we have both skin and soul in the game in each decision. But we don’t want to own so few that a small number of stocks slipping on a banana will send us into financial ruin.

In our portfolio construction, we are trying to maximize both our IQ and our EQ (emotional quotient). Too few stocks will decapitate our EQ – we won’t be able to sleep well at night, as the relatively large impact of a low-probability risk could have a devastating impact on the portfolio. I wrote about the importance of good sleep before (link here). It’s something we take seriously at IMA.

Holding too many stocks will result in both a low EQ and low IQ. It is very difficult to follow and understand the drivers of the business of hundreds of stocks, therefore a low IQ about individual positions will eventually lead to lower portfolio EQ. When things turn bad, a constant in investing, you won’t intimately know your portfolio – you’ll be surrounded by a lot of (tiny-position) strangers.

Portfolio construction is a very intimate process. It is unique to one’s EQ and IQ. Our typical portfolios have 20–30 stocks. Our “focused” portfolios have 12–15 stocks (they are designed for clients where we represent only a small part of their total wealth). There is nothing magical about these numbers – they are just the Goldilocks levels for us, for our team and our clients. They allow room for bad luck, but at the same time every decision we make matters.

Now let’s discuss position sizing. We determine position sizing through a well-defined quantitative process. The goals of this process are to achieve the following: Shift the portfolio towards higher-quality companies with higher returns. Take emotion out of the portfolio construction process. And finally, insure healthy diversification.

Our research process is very qualitative: We read annual reports, talk to competitors and ex-employees, build financial models, and debate stocks among ourselves and our research network. In our valuation analysis we try to kill the business – come up with worst-case fair value (where a company slips on multiple bananas) and reasonable fair value.

We also assign a quality rating to each company in the portfolio. Quality is absolute for us – we don’t allow low-quality companies in, no matter how attractive the valuation is (though that doesn’t mean we don’t occasionally misjudge a company’s quality).

The same company, at different stock prices, will merit a higher or lower position size. In other words, if company A is worth (fair value) $100, at $60 it will be a 3% position and at $40 it will be a 5% position. Company B, of a lower quality than A but also worth $100, will be a 2% position at $60 and a 4% position at $40 (I just made up these numbers for illustration purposes).

In other words, if there are two companies that have similar expected returns, but one is of higher quality than the other, our system will automatically allocate a larger percentage of the portfolio to the higher-quality company. If you repeat this exercise on a large number of stocks, you cannot but help to shift your portfolio to higher-quality, higher-return stocks. It’s a system of meritocracy where we marry quality and return.

Let’s talk about diversification. We don’t go out of our way to diversify the portfolio. At least, not in a traditional sense. We are not going to allocate 7% to mining stocks because that is the allocation in the index or they are negatively correlated to soft drink companies. (We don’t own either and are not sure if the above statement is even true, but you get the point.)

We try to assemble a portfolio of high-quality companies that are attractively priced, whose businesses march to different drummers and are not impacted by the same risks. Just as bank robbers rob banks because that is where the money is, value investors gravitate towards sectors where the value is. To keep our excitement (our emotions) in check, and to make sure we are not overexposed to a single industry, we set hard limits of industry exposure. These limits range from 10%–20%. We also set limits of country exposure, ranging from 7%–30% (ex-US).

In portfolio construction, our goal is not to limit the volatility of the portfolio but to reduce true risk – the permanent loss of capital. We are constantly thinking about the types of risks we are taking. Do we have too much exposure to a weaker or stronger dollar? To higher or lower interest rates? Do we have too much exposure to federal government spending? I know, risk is a four-letter word that has lost its meaning. But not to us. Low interest rates may have time-shifted risk into the future, but they haven’t cured it.

READ: Position Sizing: How to Construct Portfolios That Protect You

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NOVEMBER: National Alzheimer’s Awareness Month

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

By Dr. David Edward Marcinko MBA MEd

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The number of people living with Alzheimer’s disease is growing. The ripple effect is straining families, communities, and the healthcare system, yet talking about the disease on a personal level can be difficult.

November is Alzheimer’s Awareness Month because it can happen in any family, and because it’s worth talking about the challenges of living with or caring for someone with this disease.

You may notice splashes of teal and purple sprouting up this November, as both colors are associated with Alzheimer’s awareness. Teal is the color of the Alzheimer’s Foundation of America, chosen for its calming effect. Purple is the signature color of the Alzheimer’s Foundation, which stands for strength in the fight against Alzheimer’s disease.

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BOOLEAN: Logic & Search Engine

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

By Staff Reporters

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George Boole, an English mathematician from the 19th century, developed an algebraic method that he first described in his 1847 book, The Mathematical Analysis of Logic and expounded upon in his An Investigation of the Laws of Thought (1854).

Boolean algebra is fundamental to modern computing, and all major programming languages include it. It also figures heavily in statistical methods and set theory.

Today’s database searches are largely based on Boolean logic, which allows us to specify parameters in detail — for example, combining terms to include while excluding others. A Boolean search, in the context of a search engine, is a type of search where you can use special words or symbols to limit, widen, or define your search.

This is possible through Boolean operators such as AND, OR, and NOT, plus symbols like + (add) and – (subtract).

When you include an operator in a Boolean search, you’re either introducing flexibility to get a wider range of results, or you’re defining limitations to reduce the number of unrelated results.

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DEDICATED: Short Stock Bias Strategies

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.

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VARIETY: Insensitivity

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

By Staff Reporters

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Variety Insensitivity is the tendency to under appreciate the value of variety in choices.

According to Dan Ariely PhD, it’s like always ordering the same dish at your favorite restaurant and forgetting how exciting new flavors can be. Our brains love routine, but this can lead to boredom and missed opportunities. Embracing variety can enhance experiences and satisfaction.

So, next time you’re stuck in a rut, shake things up and try something different. Your brain will thank you for the new stimulation.

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IRMAA: Income Related Monthly Adjustment Amount

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.

READ: https://secure.ssa.gov/poms.nsf/lnx/0601101020

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CURSE of the “Stereotype”

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

By Dr. David Edward Marcinko MBA MEd

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The Stereotype Curse is the negative impact of stereotypes on an individual’s performance or behavior. It’s like a self-fulfilling prophecy where being aware of a stereotype makes you more likely to conform to it.

For example, if you’re told you’re bad at math because of your gender, that stress can affect your performance. Breaking free from stereotypes requires awareness and effort.

So, next time you feel boxed in by a stereotype, remind yourself: you’re more than a cliché.

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PATTERNICITY: Apophenia vs. Pareidolia

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

By Staff Reporters

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Patternicity is our brain’s tendency to find patterns in random data. It’s why we see faces in clouds or think the stock market follows our horoscope. According to colleague Dan Ariely PhD, this quirk helped our ancestors survive by recognizing predator shapes in the bushes, but in modern times, it can lead us astray. Our brains love making connections, sometimes too much, seeing patterns where none exist.

So, when you’re convinced that your lucky socks influence your team’s performance, remind yourself: it’s just your brain’s patternicity at work.

Apophenia vs. Pareidolia

Now, “Apophenia is the general term for the human tendency to see patterns in meaningless data that may involve visual, auditory, or other senses,” according to Dr. Harold Hong, a psychiatrist from Raleigh, North Carolina. He points out that pareidolia is a specific form of apophenia that refers to seeing visual patterns in random or ambiguous visual stimuli, such as seeing a face in the clouds.

Apophenia and pareidolia are common occurrences, says Hong, and challenges often only present when someone becomes fixated on specific patterns or details that others perceive as random. “While both phenomena are natural human tendencies, they can become concerning if someone starts to fixate on specific patterns excessively,” he says, noting that apophenia may be prevalent in certain mental health conditions, such as obsessive-compulsive disorder (OCD).

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DAILY UPDATE: 401[k] and Wamco as Stock Markets Crash!

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

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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

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

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

http://www.MedicalBusinessAdvisors.com

SPONSORED BY: Marcinko & Associates, Inc.

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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).

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

STOCKS UP

Warren Buffett’s Midas touch gave a boost to Domino’s Pizza and Pool Corp. 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 Ulta Beauty. 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.
AST SpaceMobile plummeted 9.59% after reporting bigger losses and smaller sales than Wall Street wanted to see.

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

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.

CITE: https://tinyurl.com/tj8smmes

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.

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Filed under: Experts Invited, Financial Planning, Funding Basics, Glossary Terms, Information Technology, Investing, Marcinko Associates, Recommended Books, Retirement and Benefits, Sponsors | Tagged: 401(k), 401[k], DJIA, DOW, finance, Franklin Templeton, Investing, IRS, Marcinko, NASA, NASDAQ, retirement planning, S&P 500, textbooks, TNX, VIX, Wamco, Western Asset Management, WSJ | Leave a comment »

BIAS: Of “Social Proof” and Influencers

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

INVESTING DEFINITION

By Dr. David Edward Marcinko MBA MEd

SPONSOR: http://www.MarcinkoAssociates.com

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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.

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Convertible Securities, Bonds and Corporate Securities

Posted on November 15, 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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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.

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

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DAILY UPDATE: Healthcare Private Equity Prominent as Stocks Go Down

Posted on November 15, 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.

http://www.MedicalBusinessAdvisors.com

SPONSORED BY: Marcinko & Associates, Inc.

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Private equity (PE) dollars have become prominent in the US healthcare industry in recent decades, with PE firms now owning roughly 8% of all private hospitals in the country, according to nonprofit Private Equity Stakeholder Project. But studies have illustrated the financial model’s potential adverse effects, such one published in JAMA in December 2023 that found PE-owned hospitals are 25.4% more likely to report patient complications. Others have found that PE-owned healthcare companies represented more than one-fifth of healthcare company bankruptcies in 2023 and that PE-owned hospitals see their assets drop an average of 24% following an acquisition.

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

STOCKS UP

Tapestry, parent company of luxury brands like Coach and Kate Spade, and Capri, parent company of luxury brands like Versace and Jimmy Choo, have announced they will mutually terminate their planned merger. Tapestry popped 12.80%, while Capri rose 4.43%.

Speaking of luxury brands, Burberry soared 18.04% after its CEO announced a turnaround plan designed to halt the company’s recent decline.
Semiconductor maker ASML plummeted last month on a profit warning, but rose 2.90% today on reassurances that it’s still on track to meet its 2030 revenue forecasts.

STOCKS DOWN

Super Micro Computer fell yet another 11.41% as it nears the November 16 deadline to report fiscal year earnings or be delisted from the Nasdaq.
Trump Media & Technology Group dropped 6.71% as investors digested news that company insiders are shedding shares, as well as in reaction to a number of President-elect Trump’s cabinet appointments.
Hims & Hers Health tumbled 24.46% on the news that Amazon is getting into the telehealth game, offering Prime members fixed prices on treatments for hair loss and erectile dysfunction.
Ibotta is a cashback rewards company, but its shareholders may want their cash back. The company beat on top and bottom line estimates last quarter, but the win wasn’t good enough, and shares sank 12.55%.

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

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) fell 36.21 points (–0.60%) to 5,949.17; the Dow Jones Industrial Average^® ($DJI) lost 207.33 points (–0.47%) to 43,750.86; and the NASDAQ Composite^® ($COMP) dropped 123.07 points (–0.64%) to 19,107.65.
The 10-year Treasury note yield fell three basis points to 4.42%.
The CBOE Volatility Index^® (VIX) edged up to 14.17.

CITE: https://tinyurl.com/tj8smmes

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

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PARADOX: Generosity V. Miserliness

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

By Staff Reporters

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According to BC Smith and Hilary Davidson, generosity is paradoxical. Those who give, receive back in turn. By spending ourselves for others’ well-being, we enhance our own standing. In letting go of some of what we own, we better secure our own lives. By giving ourselves away, we ourselves move toward flourishing. This is not only a philosophical or religious teaching; it is a sociological fact.

The the generosity paradox can also be stated in the negative.

By grasping on to what we currently have, we lose out on better goods that we might have gained. In holding onto what we possess, we diminish its long-term value to us. And, by always protecting ourselves against future uncertainties and misfortunes, we are affected in ways that make us more anxious about uncertainties and vulnerable to future misfortunes.

In short, by failing to care for others, we do not properly take care of ourselves. It is no coincidence that the word “miser” is etymologically related to the word “miserable.”

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INVESTMENT STRATEGIES: Market Neutral and Extended Equity

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

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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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).

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

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).

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

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MEDICAL TESTS: The Surprise Paradox

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

By Staff Reporters

SPONSOR: http://www.MARCINKOASSOCIATES.com

THE SURPRISE MEDICAL TEST PARADOX

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Classic Definition: A doctor announces to her hospitalized patient that there will be a painful medical test sometime during the following week. The patient begins to speculate about when it might occur, until another patient announces that there is no reason to worry because a medical surprise test is impossible.

The test cannot be given on Friday, because by the end of the day on Thursday we would know that the test must be given the next day. Nor can the test be given on Thursday, because, given that we know that the test cannot be given on Friday, by the end of the day on Wednesday we would know that the test must be given the next day. And likewise for Wednesday, Tuesday, and Monday!

Modern Circumstance: The patient spends a restful weekend not worrying about the test, yet is very surprised when it is given on Wednesday. How could this happen?

Paradox Example: There are various versions of this paradox; one of them, called the Hangman, concerns a condemned prisoner who is clever but ultimately overconfident. The implications of the paradox are as yet unclear, and there is virtually no agreement about how it should be solved.

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FINANCIAL YIELDS: All About Fixed Income Securities

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

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

SPONSOR: http://www.CertifiedMedicalPlanner.org

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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.

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

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PHYSICIAN: Pay Cuts in 2025

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

By Staff Reporters

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Doctors, Facing Another Pay Cut, Call for Permanent Medicare Payment Reform

The Centers for Medicare and Medicaid Services (CMS) is moving forward with a 2.9% cut to physician payments in 2025 despite protest from major industry groups. CMS has finalized the calendar year 2025 Medicare Physician Fee Schedule rule that sets payment rates for next year and also outlines new policies focused on primary care, preserved telehealth flexibilities, and a strengthened Medicare Shared Savings Program (MSSP).

But, provider groups were quick to condemn CMS’ decision to go ahead with the pay cut, which was proposed in the draft rule released in July. In a statement, Bruce Scott, MD, president of the American Medical Association (AMA), pointed out that that while physicians are receiving a 2.8% payment cut next year, medical practice costs for physicians will increase by 3.5% in 2025. After adjusted for inflation, Medicare reimbursement to physicians has decreased 29% since 2001, the AMA says.

Source: Heather Landi, Fierce Healthcare [11/2/24]

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Take the Physician-Focused FINANCIAL PLAN “Challenge”

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

Do You Have “What it Takes”?

Book Marcinko

DEM 2

By Professor David E. Marcinko MBBS DPM MBA MEd CMP®

Institute of Medical Business Advisors, Inc.

mba

www.CertifiedMedicalPlanner.org

cmp-logo16

My History

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.

Of Financial Certifications and Designations

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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:

MORE: Comprehensive Financial Planning Strategies for Doctors …[Best Practices from Leading Consultants and Certified Medical Planners™]

MORE: Risk Management Liability Insurance, and Asset Protection Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]

Conclusion

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

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PART 1: My Sample Financial Plan I [Data gathering, goals and objectives]

PART 2: My Sample Financial Plan II [Data Analytics, Creation and Crafting]

PART 3: Request here: MarcinkoAdvisors@msn.com [Stress Testing and Completion]

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Thank you for your response. ✨

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BONDS: Zero Coupon [Pros & Cons]

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

DEFINITIONS

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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Zero-coupon securities (aka zeros) are debt securities [bonds] that, unlike most of their debt security counterparts, make no periodic interest payments to investors. Instead, they are sold at a deep discount (with an imputed interest rate priced into the discount), then redeemed for their full face value at maturity.

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

When held to maturity, a zero’s entire return comes from the difference between its purchase price and its value at maturity.

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ANGUS DEATON’S: Paradox

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.

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

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.

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ECONOMIC: Paradoxes all Financial Advisors Should Know

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

BY DR. DAVID EDWARD MARCINKO MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

SPONSOR: http://www.CertifiedMedicalPlanner.org

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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.

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

How should you respond to these paradoxes? As you plan for your financial future, embrace the concept of “loosely held views.”

In other words, make financial plans, but continuously update your views, question your assumptions and rethink your priorities.

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Filed under: "Ask-an-Advisor", "Doctors Only", CMP Program, Experts Invited, Financial Advisor Listings, Financial Planning, Funding Basics, Glossary Terms, iMBA, Inc., Investing, LifeStyle, Marcinko Associates, mental health | Tagged: adam grossman, Bill Gates, Buffett, Carnegiw, CMP, diversification, financial advisor, financial advisors, financial paradox, financial paradoxes, financial planner, financial planners, Financial Planning, financial planning failures, iMBA, Investing, personal-finance, retirement planning, Rockefeller | Leave a comment »

PRIMARY MEDICAL CARE: The Paradox

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

BY DR. DAVID EDWARD MARCINKO MBA MEd CMP™

Sponsor: http://www.CertifiedMedicalPlanner.org

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Classic Definition: Despite rising costs, health care often is of poor quality. Evidence from a classic medical improvement outcomes study assessed care of patients with several chronic diseases. This study found that patients’ functional health status outcomes are similar to care rendered by specialists and generalists but that generalists use far fewer resources. Similar outcome at lower cost represents higher value.

Modern Circumstance: Current solutions to improving care quality may do more harm than good if they focus more on diseases than on people. Efforts to improve the parts (evidence-based care of specific diseases) may not necessarily improve the whole (the health of people and populations).

Expanding access to specialty care, for example, has been proposed as both a source of and a solution for deficiencies in quality of care. Primary care is touted as an essential building block of a high-value health care system even as it is undermined by systems attempting to improve the quality, effectiveness, and value of their health care..

Paradox Example: The above contradictions plague improvement efforts in health care systems around the world, particularly the United States The paradox is that compared with specialty care or with systems dominated by specialty medical care, primary care is associated with the following: (1) poorer quality care for individual diseases, yet (2) similar functional health status at lower cost for people with chronic disease, and (3) better quality, better health, greater health equity and lower costs for whole peoples and populations.

And so, this contradiction plagues improvement efforts in health care systems around the world, particularly the United States.

Cite: Kurt Stange MD PhD and Robert Ferrer MD MPH

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Filed under: "Doctors Only", Career Development, CMP Program, Drugs and Pharma, Ethics, Experts Invited, Glossary Terms, Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, iMBA, iMBA, Inc., Touring with Marcinko | Tagged: CMP, family medicine, health, healthcare, iMBA, Institute Medical Business Advisors, Kurt Stange, Marcinko, medical business advisors, mental health, paradox, primary care, primary care paradox, primary medical care, Robert Ferrer | Leave a comment »

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