BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Posted on October 4, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Markets: Stocks came out of the Q4 gate with the S&P and NASDAQ posting their best first day of a quarter since 2009. Is it just a temporary “relief rally” from the Fed-induced gloom of September? We’ll find out soon. One of the few party downers was Tesla, which got hammered after it revealed it shipped fewer cars than expected last quarter.
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Meta meanwhile will reduce budgets across most teams, even those that are growing, and that individual teams will sort out how to handle headcount changes. That could mean not filling roles that employees depart, shifting people to other teams, or working to “manage out people who aren’t succeeding,” CEO Mark Zuckerberg said. The cost cuts and hiring freeze are Meta’s starkest admission that advertising revenue growth is slowing amid mounting competition for users’ attention. Besides economic pressures, the company’s advertising business, built on precise consumer targeting, has lost some of its edge due to new privacy restrictions from Apple Inc. on tracking iPhone users. Also, rival TikTok is attracting younger users away from Meta’s Instagram platform. Zuckerberg is also making an expensive bet on the metaverse, an immersive virtual reality future where he imagines people will eventually communicate, an effort he has said will lose money for many years.
What Is Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)?
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EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company’s overall financial performance and is used as an alternative to net income in some circumstances. EBITDA, however, can be misleading because it strips out the cost of capital investments like property, plant, and equipment.
This metric also excludes expenses associated with debt by adding back interest expense and taxes to earnings. Nonetheless, it is a more precise measure of corporate performance since it is able to show earnings before the influence of accounting and financial deductions.
Simply put, EBITDA is a measure of profitability. While there is no legal requirement for companies to disclose their EBITDA, according to the U.S. generally accepted accounting principles (GAAP), it can be worked out and reported using the information found in a company’s financial statements.
The earnings, tax, and interest figures are found on the income statement, while the depreciation and amortization figures are normally found in the notes to operating profit or on the cash flow statement. The usual shortcut to calculate EBITDA is to start with operating profit, also called earnings before interest and tax (EBIT) then add back depreciation and amortization.
Derived from the idea that “even a dead cat will bounce if it falls from a great height“, the phrase, which originated on Wall Street, is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe market decline.
Posted on October 3, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Leaders at the Swiss bank tried to calm down investors and clients after concerns mounted about its weak financial position, the FT reported.
Credit Suisse’s stock price has fallen to a record low and spreads on its credit default swaps have spiked, suggesting that investors are worried about it potentially defaulting.
CEO Ulrich Körner fired off a memo assuring employees that the bank has a “strong capital base and liquidity position,” but it remains in a “critical moment” ahead of a massive overhaul.
A relatively new method of registration under the Act of ’33 is known as shelf registration.
Under this rule, an issuer may register any amount of securities that, at the time the registration statement becomes effective, is reasonably expected to be offered and sold within two years of the initial effective date of the registration.
Once registered, the securities may be sold continuously or periodically within 2 years without any waiting period for a registration to clear issuers generally like shelf registration because of the flexibility it gives them to take advantage of changing market conditions.
In addition, the legal, accounting, and printing costs involved in issuance are reduced, since a single registration statement suffices for multiple offerings within the 2 year period. In effect, what the issuer does is register securities that will meet its financing needs for the next 2 years.
It issues what it needs at the current time, and puts the balance on the “shelf” to be taken off the shelf as needed.
Conclusion:
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Posted on October 3, 2022 by The D.E.A. ROGUE WARRIOR
ON OPEN AND CLOSED MUTUAL FUNDS
By staff reporters
A closed-end fund (CEF) or closed-ended fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund.
Unlike open-end funds, new shares in a closed-end fund are not created by managers to meet demand from investors. Instead, the shares can be purchased and sold only in the market, which is the original design of the mutual fund, which predates open-end mutual funds but offers the same actively-managed pooled investments.
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BUSINESS, FINANCE, INVESTING AND INSURANCE TEXTS FOR DOCTORS
Written by doctors and healthcare professionals, this textbook should be mandatory reading for all medical school students—highly recommended for both young and veteran physicians—and an eliminating factor for any financial advisor who has not read it. The book uses jargon like ‘innovative,’ ‘transformational,’ and ‘disruptive’—all rightly so! It is the type of definitive financial lifestyle planning book we often seek, but seldom find. —LeRoy Howard MA CMPTM,Candidate and Financial Advisor, Fayetteville, North Carolina I taught diagnostic radiology for over a decade. The physician-focused niche information, balanced perspectives, and insider industry transparency in this book may help save your financial life. —Dr. William P. Scherer MS, Barry University, Ft. Lauderdale, Florida This book was crafted in response to the frustration felt by doctors who dealt with top financial, brokerage, and accounting firms. These non-fiduciary behemoths often prescribed costly wholesale solutions that were applicable to all, but customized for few, despite ever-changing needs. It is a must-read to learn why brokerage sales pitches or Internet resources will never replace the knowledge and deep advice of a physician-focused financial advisor, medical consultant, or collegial Certified Medical Planner™ financial professional. —Parin Khotari MBA,Whitman School of Management, Syracuse University, New York In today’s healthcare environment, in order for providers to survive, they need to understand their current and future market trends, finances, operations, and impact of federal and state regulations. As a healthcare consulting professional for over 30 years supporting both the private and public sector, I recommend that providers understand and utilize the wealth of knowledge that is being conveyed in these chapters. Without this guidance providers will have a hard time navigating the supporting system which may impact their future revenue stream. I strongly endorse the contents of this book.—Carol S. Miller BSN MBA PMP,President, Miller Consulting Group, ACT IAC Executive Committee Vice-Chair at-Large, HIMSS NCA Board Member This is an excellent book on financial planning for physicians and health professionals. It is all inclusive yet very easy to read with much valuable information. And, I have been expanding my business knowledge with all of Dr. Marcinko’s prior books. I highly recommend this one, too. It is a fine educational tool for all doctors.—Dr. David B. Lumsden MD MS MA,Orthopedic Surgeon, Baltimore, Maryland There is no other comprehensive book like it to help doctors, nurses, and other medical providers accumulate and preserve the wealth that their years of education and hard work have earned them. —Dr. Jason Dyken MD MBA,Dyken Wealth Strategies, Gulf Shores, Alabama I plan to give a copy of this book written ‘by doctors and for doctors’ to all my prospects, physician, and nurse clients. It may be the definitive text on this important topic. —Alexander Naruska CPA,Orlando, Florida
Health professionals are small business owners who need to apply their self-discipline tactics in establishing and operating successful practices. Talented trainees are leaving the medical profession because they fail to balance the cost of attendance against a realistic business and financial plan. Principles like budgeting, saving, and living below one’s means, in order to make future investments for future growth, asset protection, and retirement possible are often lacking. This textbook guides the medical professional in his/her financial planning life journey from start to finish. It ranks a place in all medical school libraries and on each of our bookshelves. —Dr. Thomas M. DeLauro DPM,Professor and Chairman – Division of Medical Sciences, New York College of Podiatric Medicine
Physicians are notoriously excellent at diagnosing and treating medical conditions. However, they are also notoriously deficient in managing the business aspects of their medical practices. Most will earn $20-30 million in their medical lifetime, but few know how to create wealth for themselves and their families. This book will help fill the void in physicians’ financial education. I have two recommendations: 1) every physician, young and old, should read this book; and 2) read it a second time! —Dr. Neil Baum MD,Clinical Associate Professor of Urology, Tulane Medical School, New Orleans, Louisiana
I worked with a Certified Medical Planner™ on several occasions in the past, and will do so again in the future. This book codified the vast body of knowledge that helped in all facets of my financial life and professional medical practice. —Dr. James E. Williams DABPS, Foot and Ankle Surgeon, Conyers, Georgia
This is a constantly changing field for rules, regulations, taxes, insurance, compliance, and investments. This book assists readers, and their financial advisors, in keeping up with what’s going on in the healthcare field that all doctors need to know. —Patricia Raskob CFP® EA ATA, Raskob Kambourian Financial Advisors, Tucson, Arizona I particularly enjoyed reading the specific examples in this book which pointed out the perils of risk … something with which I am too familiar and have learned (the hard way) to avoid like the Black Death. It is a pleasure to come across this kind of wisdom, in print, that other colleagues may learn before it’s too late— many, many years down the road. —Dr. Robert S. Park MD, Robert Park and Associates Insurance, Seattle, Washington
Although this book targets physicians, I was pleased to see that it also addressed the financial planning and employment benefit needs of nurses; physical, respiratory, and occupational therapists; CRNAs, hospitalists, and other members of the health care team….highly readable, practical, and understandable. —Nurse Cecelia T. Perez RN, Hospital Operating Room Manager, Ellicott City, Maryland
Personal financial success in the PP-ACA era will be more difficult to achieve than ever before. It requires the next generation of doctors to rethink frugality, delay gratification, and redefine the very definition of success and work–life balance. And, they will surely need the subject matter medical specificity and new-wave professional guidance offered in this book. This book is a ‘must-read’ for all health care professionals, and their financial advisors, who wish to take an active role in creating a new subset of informed and pioneering professionals known as Certified Medical Planners™. —Dr. Mark D. Dollard FACFAS, Private Practice, Tyson Corner, Virginia As healthcare professionals, it is our Hippocratic duty to avoid preventable harm by paying attention. On the other hand, some of us are guilty of being reckless with our own financial health—delaying serious consideration of investments, taxation, retirement income, estate planning, and inheritances until the worry keeps one awake at night. So, if you have avoided planning for the future for far too long, perhaps it is time to take that first step toward preparedness. This in-depth textbook is an excellent starting point—not only because of its readability, but because of his team’s expertise and thoroughness in addressing the intricacies of modern investments—and from the point of view of not only gifted financial experts, but as healthcare providers, as well … a rare combination. —Dr. Darrell K. Pruitt DDS, Private Practice Dentist, Fort Worth, Texas This text should be on the bookshelf of all contemporary physicians. The book is physician-focused with unique topics applicable to all medical professionals. But, it also offers helpful insights into the new tax and estate laws, fiduciary accountability for advisors and insurance agents, with investing, asset protection and risk management, and retirement planning strategies with updates for the brave new world of global payments of the Patient Protection and Affordable Care Act. Starting out by encouraging readers to examine their personal ‘money blueprint’ beliefs and habits, the book is divided into four sections offering holistic life cycle financial information and economic education directed to new, mid-career, and mature physicians.
This structure permits one to dip into the book based on personal need to find relief, rather than to overwhelm. Given the complexity of modern domestic healthcare, and the daunting challenges faced by physicians who try to stay abreast of clinical medicine and the ever-evolving laws of personal finance, this textbook could not have come at a better time. —Dr. Philippa Kennealy MD MPH, The Entrepreneurial MD, Los Angeles, California Physicians have economic concerns unmatched by any other profession, arriving ten years late to the start of their earning years. This textbook goes to the core of how to level the playing field quickly, and efficaciously, by a new breed of dedicated Certified Medical Planners™. With physician-focused financial advice, each chapter is a building block to your financial fortress. —Thomas McKeon, MBA, Pharmaceutical Representative, Philadelphia, Pennsylvania An excellent resource … this textbook is written in a manner that provides physician practice owners with a comprehensive guide to financial planning and related topics for their professional practice in a way that is easily comprehended. The style in which it breaks down the intricacies of the current physician practice landscape makes it a ‘must-read’ for those physicians (and their advisors) practicing in the volatile era of healthcare reform. —Robert James Cimasi, MHA ASA FRICS MCBA CVA CM&AA CMP™, CEO-Health Capital Consultants, LLC, St. Louis, Missouri Rarely can one find a full compendium of information within a single source or text, but this book communicates the new financial realities we are forced to confront; it is full of opportunities for minimizing tax liability and maximizing income potential. We’re recommending it to all our medical practice management clients across the entire healthcare spectrum. —Alan Guinn, The Guinn Consultancy Group, Inc., Cookeville, Tennessee Dr. David Edward Marcinko MBA CMP™ and his team take a seemingly endless stream of disparate concepts and integrate them into a simple, straightforward, and understandable path to success. And, he codifies them all into a step-by-step algorithm to more efficient investing, risk management, taxation, and enhanced retirement planning for doctors and nurses. His text is a vital read—and must execute—book for all healthcare professionals and physician-focused financial advisors. —Dr. O. Kent Mercado, JD, Private Practitioner and Attorney, Naperville, Illinois
Kudos. The editors and contributing authors have compiled the most comprehensive reference book for the medical community that has ever been attempted. As you review the chapters of interest and hone in on the most important concerns you may have, realize that the best minds have been harvested for you to plan well… Live well. —Martha J. Schilling; AAMS® CRPC® ETSC CSA, Shilling Group Advisors, LLC, Philadelphia, Pennsylvania I recommend this book to any physician or medical professional that desires an honest no-sales approach to understanding the financial planning and investing world. It is worthwhile to any financial advisor interested in this space, as well. —David K. Luke, MIM MS-PFP CMP™, Net Worth Advisory Group, Sandy, Utah Although not a substitute for a formal business education, this book will help physicians navigate effectively through the hurdles of day-to-day financial decisions with the help of an accountant, financial and legal advisor. I highly recommend it and commend Dr. Marcinko and the Institute of Medical Business Advisors, Inc. on a job well done. —Ken Yeung MBA CMP™, Tseung Kwan O Hospital, Hong Kong I’ve seen many ghost-written handbooks, paperbacks, and vanity-published manuals on this topic throughout my career in mental healthcare. Most were poorly written, opinionated, and cheaply produced self-aggrandizing marketing drivel for those agents selling commission-based financial products and expensive advisory services. So, I was pleasantly surprised with this comprehensive peer-reviewed academic textbook, complete with citations, case examples, and real-life integrated strategies by and for medical professionals. Although a bit late for my career, I recommend it highly to all my younger colleagues … It’s credibility and specificity stand alone. —Dr. Clarice Montgomery PhD MA,Retired Clinical Psychologist In an industry known for one-size-fits-all templates and massively customized books, products, advice, and services, the extreme healthcare specificity of this text is both refreshing and comprehensive. —Dr. James Joseph Bartley, Columbus, Georgia
My brother was my office administrator and accountant. We both feel this is the most comprehensive textbook available on financial planning for healthcare providers. —Dr. Anthony Robert Naruska DC,Winter Park, Florida
Posted on October 1, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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The FOMC just reiterated calls for aggressive policy to combat stubbornly high inflation—fueling expectations for bigger rate hikes amid a stock-market sell-off that’s seen major indexes hit new lows for the year—and some analysts project the losses could only deepen.
Expectations for rate hikes climbed amid the comments, with markets pricing in an end-of-year rate of 4.5%—above the 4.4% rate Fed officials projected earlier this month, which itself was one percentage point higher than the forecast in June.
DEFINITION: The PPI is a group of indexes that measure the change, over time, in the prices received by domestic producers of goods and services. It measures price changes from the perspective of the seller rather than the consumer, as with the CPI. The CPI would include imported goods, while the PPI is relevant to U.S. producers, and therefore would not include imports.
The PPI measures over 10,000 products and services. It reports the price changes prior to the retail level. This information is useful to the government in formulating fiscal and monetary policies. The data gathered from the PPI is often used in escalating purchase and sales contracts. That is the dollar amount to be paid at some time in the future.
NOTE: Long-term managed medical care contracts of the future will seek escalation clauses for increases in prices.
Posted on October 1, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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The S&P 500 tumbled 1.5% after trying — and failing — to find its footing earlier in the session, while the Dow Jones Industrial Average erased nearly 500 points, or 1.7%. The technology-focused NASDAQ Composite declined 1.5%.
The NASDAQ and S&P 500 are now in three-quarter losing streaks for the first time since 2009. The Dow also posted a third-straight losing quarter, its first such time since 2015. All of the major indexes are down at least 21% on the year.
The S&P 500’s drop on Friday marked its 50th decline of 1% or more this year, the most downside volatility since 2009, according to Compound Advisors’ Charlie Bilello. For the month, the S&P 500 and Dow were down more than 9%, and the NASDAQ about 5.5%. September’s 9.3% decline for the S&P was its largest one-month percentage decline since March 2020.
Posted on September 30, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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The final hour of trading on a Friday when stock index futures, stock index options, and stock options all expire. This happens on the third Friday in March, June, September, and December. See Quadruple Witching Hour.
Triple witching sounds like something from a horror movie, but it’s actually a financial term. Options and derivatives traders know this phenomenon well because it’s the day when three different types of contracts expire. It happens only once a quarter and can cause wild swings in volatility, as large institutional traders roll over futures contracts to free up cash. Doing so creates a ton of increased volume—sometimes 50% higher than average, especially in the last trading hour of the day—but individual investors needn’t feel spooked. In fact, some might even view this volatility as a profit-making opportunity.
Which 3 Types of Derivative Contracts Expire on Triple Witching Day?
Stock Options: These are contracts taken out on the direction of a stock price at a future date. Unlike stocks, they’re not an investment in a company; rather, they’re the right to buy or sell shares of a company at a later time frame. Calls let you buy stock shares at a set price, known as the strike price, on or before the expiration date. Puts give you the right to sell shares.
Index Options: These are futures contracts on a stock index, such as the S&P 500. These options are settled in cash.
Index Futures: These are futures contracts on equity indexes. These contracts are also settled in cash.
A futures contract is also referred to as an “anticipated hedge” because it’s used to lock in prices on future buy or sell transactions. These hedges are a way to protect a portfolio from market setbacks without selling long-term holdings.
It’s worth noting that a few times a year, single stock futures also expire on witching day, adding a fourth asset to the trading cauldron, and that’s why some investors refer to this date as “quadruple witching,” although the terms are interchangeable.
When Is Triple Witching? Triple Witching Calendar 2022
In modern trading, triple witching happens on the third Friday of March, June, September, and December (the last month of each quarter).
Upcoming Triple Witching Dates
Friday, March 18, 2022
Friday, June 17, 2022
Friday, September 16, 2022
Friday, December 16, 2022
What Is the Witching Hour?
In the U.S. stock market, the last hour of the trading day, before the closing bell, sees the most trading activity, so the witching hour is from 3–4 pm EST. In folklore, the “witching hour” actually happens in the dead of night, from 3–4 am. It was known as a time when spirits reached the height of their powers. During the Middle Ages, the Catholic Church even banned people from venturing outside during this time, so as not to get caught in the chaos.
Today, such ideas aren’t taken any more seriously than mere superstition, but triple witching can cause chaos among investors, if they are not aware of what is happening.
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What Happens During Triple Witching?
As you might imagine, a lot of trading activity happens in the market when stock options, index options, and index futures contracts all expire. We’re talking a lot of money here: during Triple Witching in September 2021, for example, around $3.4 trillion of equity options expired.
So, what exactly is going on? Should they keep their hedges on? Should they speculate? Should they roll, or close out, their contracts, and if so, by how much? This is what generates the increased trading activity, and the large trades, especially from offsetting trades, can cause temporary price distortions.
At the same instant that the derivatives contracts expire, the anticipatory hedges that traders have placed become unnecessary, and so traders also seek to close these hedges, and the offsetting trades result in increased volume. These large volume increases can in turn cause price swing (i.e., volatility) in the underlying assets.
How Does Triple Witching Affect the Stock Market?
Triple witching itself doesn’t move the stock market; it just creates increased volume. In the same way, the expiration of the options and futures contracts don’t necessarily result in volatility—that’s caused by the actions that traders take based on the temporary price fluctuations of their underlying assets which can be moved due to the increased volume.
When this happens, arbitrageurs try to take advantage, often making trades that are completed in mere seconds. An arbitrageur is a trader who looks for price inefficiencies in a security and then seeks to make a profit by buying and selling it simultaneously. This practice involves much risk.
Is Triple Witching Bullish or Bearish?
Historically speaking, triple witching is not always an “up” day, and it’s not always a “down” day for the markets. It does not signify a trend. Typically, it neither moves the market significantly higher nor lower; it simply adds a temporary increase in volume and liquidity.
However, it’s important to note that market volumes also tend to be higher on index re-balancing day as well as during and after broader macroeconomic news events, and so, when taken in tandem with triple witching, these events can cause big moves in the market.
Examples of Triple Witching Volatility in Light of News Events
On June 18, 2021, a record number—$818 billion—of stock options expired, which led to nearly $3 trillion in “open interest,” or open contracts. On this day, the Federal Reserve also announced that it might raise interest rates in 2023 due to inflationary pressures. These news events resulted in increased volatility, and the S&P 500 lost 1.3% while the Dow Jones Industrial Average dropped 1.6%.
On September 17th, 2021, one week ahead of the Federal Reserve’s meeting, market volatility was growing based on mounting concerns about the COVID-19 Delta variant impacting the economy as well as the Federal Reserve’s announcement that it would begin to unwind its monetary stimulus. These news events, taken along with the S&P 500’s quarterly index rebalancing, which also happened that day, caused the S&P 500 to lose 1%.
Is There Such a Thing as “Quadruple” Witching?
Single Stock Futures are the fourth type of derivative contract which can expire on triple witching day. This can cause the phenomenon to be called “quadruple witching,” although one term can replace the other. Single stock futures are futures contracts placed on individual stocks, with one contract controlling 100 shares being typical. They are a hedging tool that was previously banned from trading in the United States. The Commodity Futures Modernization Act lifted the ban in 2000, and single stock futures were traded on the One Chicago Exchange from November, 2002 until September, 2020, although currently they are only available on overseas financial markets.
How Did Triple Witching Affect 1987’s “Black Monday?”
On October 19th, 1987, the Dow Jones Industrial Average lost 22.6% in a single trading session. The day became known as “Black Monday,” but triple witching events, which took place the Friday before, on October 16, 1987, had caused the selloff of options and futures contracts to rapidly accelerate, resulting in stocks tanking in pre-day trading. The massive sell orders were left unchecked by any kinds of systematic stop gaps, and so financial markets roiled globally throughout the day. This stock market crash was the greatest one-day decline to occur since the Great Depression in 1929.
Taking lessons from the event, regulators moved the options expiration from the morning to the afternoon and put “circuit breakers” into place that would let the exchanges temporarily halt trading in the event of another massive sell off.
How Can Investors Prepare for Triple Witching Days?
The triple witching takeaway is that investors should be aware of what happens on these days and understand that there is a lot more volume in the markets. There could be some drastic price swings, but investors shouldn’t be carried away by any short-term emotions (which, really, is great advice any day in the markets).
Posted on September 30, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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A correction is a decline of 10 percent or more from an asset’s most recent high. For a stock that recently reached an all-time high of $100 per share, a correction would occur if the stock fell to $90 or lower. Corrections can happen in any financial asset such as individual stocks, broad market indexes like the S&P 500 or commodities. The S&P 500 fell below 4,336 in January 2022, marking a more than 10 percent decline from its high earlier in the year.
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Corrections can be caused by a number of different factors and they’re difficult, if not impossible, to predict ahead of time. Short-term concerns about economic growth, Federal Reserve policy, political issues or even a new variant of the COVID-19 virus all have the potential to trigger market corrections. These issues make investors fearful that their prior assumptions about the future might not be correct. When people are fearful, they typically look to sell stocks in favor of assets considered safer such as U.S. Treasury bonds.
A stock-market correction may sound similar to a crash, but there are some key distinctions between the two. A crash is a sharp drop in share prices, typically a double-digit percentage decline, over the course of just a few days. A correction tends to happen at a slower pace, therefore making the drop less steep than a crash would be. One of the most famous stock-market crashes happened in October 1987, when the Dow Jones Industrial Average fell 22.6 percent in a single day that became historically known as Black Monday.
Corrections are more subtle and are sometimes even thought to be healthy for rising markets because they help things from becoming overheated. Like their name suggests, they correct prices back down from a slightly elevated level.
Difference between a correction and a bear market
The difference between a correction and a bear market is in the magnitude of the decline. A correction is a decline of at least 10 percent, but less than 20 percent, while a bear market begins at a decline of at least 20 percent from a recent peak. Bear markets also tend to last longer than corrections because they tend to reflect an economic reality, such as a recession, rather than a short-term concern that may or may not materialize. The challenge for investors is that it’s very difficult to determine in real time whether a market is just in a correction or if it could become a bear market.
Posted on September 30, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Major US indexes plunged after staging a relief rally in the prior session.
UK prime minister Liz Truss stood by proposed tax cuts, despite a chorus of vocal critics.
US Treasury yields hit multi-year highs this week as markets react to growing recession fears.
Stocks recovered from their steepest losses of the day, with the Dow Jones Industrial Average down over 600 points and the NASDAQ lower by nearly 4% at one point in the afternoon. Major indexes still ended deep in the red, though, with the S&P 500 hitting a new closing low for the year.
UK prime minister Liz Truss said that she stood by the government’s plan to cut taxes, which earlier in the week rocked markets and sent the pound falling last week to 37-year lows. Top economists including Paul Krugman, Mohamed El-Erian, and Nouriel Roubini have ripped into the new fiscal policy, warning that it could set UK inflation surging even higher and require more aggressive moves by the central bank, upping the risk of recession.
The CBOE Volatility Index, known by its ticker symbol VIX, is a popular measure of the stock market’s expectation of volatility implied by S&P 500 index options, calculated and published by the Chicago Board Options Exchange (CBOE). It is colloquially referred to as the fear index or the fear gauge.
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According to Wikipedia, the formulation of a volatility index, and financial instruments based on such an index, were developed by Menachem Brenner and Dan Galai in 1986 and described in academic papers. The authors stated the “volatility index, to be named Sigma Index, would be updated frequently and used as the underlying asset for futures and options. … A volatility index would play the same role as the market index play for options and futures on the index.”
In 1986, Brenner and Galai proposed to the American Stock Exchange the creation of a series of volatility indices, beginning with an index on stock market volatility, and moving to interest rate and foreign exchange rate volatility. In 1987, Brenner and Galai met with Joseph Levine and Deborah Clayworth at the Chicago Board of Options Exchange to propose various structures for a tradeable index on volatility; those discussions continued until 1991.
The current VIX concept formulates a theoretical expectation of stock market volatility in the near future. The current VIX index value quotes the expected annualized change in the S&P 500 index over the next 30 days, as computed from the options-based theory and current options-market data.
The CBOE retained consultant Robert Whaley in 1992 to develop a tradable volatility instrument based on index option prices.[4] Since 1993, CBOE has published VIX real-time data. Based on historical index option prices, Whaley has computed a data series of retrospective daily VIX levels from January 1986 onward.
TODAY: May First, 2022 = 33.40+3.41 (11.37%) today
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.
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Posted on September 30, 2022 by The D.E.A. ROGUE WARRIOR
Are We Experiencing a Bear Market Relief Rally?
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Maybe yesterday – Not today!
By Staff Reporters
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A bear market relief rally describes a period inside of a bear market in which prices of stocks temporarily increase during, sometimes quite sharply, before returning to new lows. This rise in prices is typically a short-lived increase, sometimes lasting anywhere from days to months, amidst an overall long-term downward trend in the market.
Posted on September 30, 2022 by The D.E.A. ROGUE WARRIOR
ME-P Special Report
By Lon Jefferies MBA CFP®
WHO Are the Best Predictors of Stock Market Performance?
Every day CNBC airs dozens of “financial professionals” making market forecasts. Similarly, every financial publication has multiple pieces regarding the future of the stock market. With so much information, how is it possible to determine who is worth listening to and what information to incorporate into your investment strategy?
Dropping Names
Without dropping any names, I’d suggest that the more confident a market pundit is about his or her prediction, the more you should question their advice.
People who make strong, unwavering forecasts are interesting to watch and appear as intelligent, appealing leaders whose advice is worth following. Meanwhile, people who frequently say phrases such as “it depends,” “maybe,” or even “I don’t know” don’t seem to be adding much value and don’t appear to be any more knowledgeable than the average investor. Yet, I’d suggest you tune out the stanch forecaster pounding his fist on the table as he speaks and rather listen closely to the individual who is less willing to make firm predictions.
Stock market performance
Stock market performance is clearly not a result of any singular factor such as whether or not companies will generate more profits than expected. If this was the case, making market predictions would be easy – one could simply guess the answer to be yes or no and have a 50% chance of being correct. Rather, hitting profit targets is only point A on a long list of factors impacting stock market performance.
Point B may be whether or not the Federal Reserve will raise interest rates during their next meeting. Again, our market forecaster could guess yes or no to this question and have a 50% chance of being correct. However, when considering both factors A and B, now our market forecaster has to be right twice on two issues where there is only a 50% probability of being correct on each. Simple math tells us there is only a 25% chance that this will occur (50% x 50% = 25%).
Point C may be whether the republicans or the democrats win the 2016 election. Again, there is a 50% chance of either possibility. Now there are three factors in play, each with a 50% probability, so the probability that the market pundit will get all three factors correct is 12.5% (50% x 50% x 50% = 12.5%).
Point D may be whether the US dollars strengthens or weakens when compared to other currencies. Again, there is a 50% chance of getting this right, so when we consider all four factors, there is now a 6.25% chance of getting it right (50% x 50% x 50% x 50% = 6.25%).
The equation
There are hundreds of factors that go into this equation. Will Greece have another economic crisis? Will the price of oil go up or down? Will a war breakout with Russia? This is exactly why forecasting market performance is so difficult!
For this reason, the people who make the best forecasters are people who say phrases such as “perhaps,” “however,” and “on the other hand” a lot. Doing so illustrates that the individual has looked at the situation from a lot of different perspectives and realizes that everything may not go according to plan. These types of people also tend to admit when they are wrong more willingly and update their analysis utilizing the latest information available, even if the new information doesn’t reflect what they previously anticipated. Their thought process is likely: “I got point A wrong, so I need to adjust my thinking on point B, which will have an impact on point C, so how does this change my perspective on point D.” We’ll call this a point-A-to-point-B-to-point-C-to-point-D mentality.
By comparison, the forecaster who makes the strong prediction while staring into the camera likely utilizes more of a point-A-to-point-D mentality. They are less likely to admit that there are more factors affecting market performance than can be managed, and less likely to incorporate new information that doesn’t coincide with his previous prediction when making forward-looking forecasts. Their thought process is likely: “I may have gotten point A wrong, but that doesn’t matter. All that matters is point D and I believe I got that right when making my prediction.” This approach is obviously less logic-based than the approach taken by the forecaster who knows there are too many factors to enable an individual to make a confident prediction.
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Assessment
While people who make confident predictions regarding market performance are entertaining to watch and provide advice that is simple to follow (he said buy, so I’ll buy), their advice is not likely to be any more accurate than other market pundits. In fact, if they are unwilling to admit when they get any potential factor concerning market performance wrong, their advice may be more damaging then useful. By comparison, market forecasters who utilize phrases such as “however,” “it is hard to say,” and “I’m not sure” provide advice that may come off as unhelpful or impossible to follow, but it is these people who provide logic-based nuggets of information that are likely to benefit your investment portfolio.
ABOUT
Lon Jefferies, a Certified Financial Planner™ (CFP), is a fee-only financial advisor and trusted fiduciary at Net Worth Advisory Group in Salt Lake City, Utah. He is dedicated to providing comprehensive financial planning and investment management on a fee-only basis.
Conclusion
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In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock.
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Derived from the idea that “even a dead cat will bounce if it falls from a great height”, the phrase, which originated on Wall Street, is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline.
The dead cat bounce is a sudden and temporary increase in stock price caused by investors erroneously believing that the stock price’s reached its lowest.
The dead cat bounce can only be fully accurately determined with concrete data in hindsight.
Both falsely identifying a stock price trough (i.e., falling victim to a dead cat bounce) and falsely identifying a true price trough as a dead cat bounce will result in negative financial consequences.
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
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By Michael A. Gayed, CFA
Portfolio Manager of the ATAC Rotation Funds
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Bob Farrell is a legendary Wall Street trader and market analyst. He’s perhaps best-known for his “10 rules” of investing that he developed based on his 50-year career in the industry. One of the more popular rules says that “when all the experts and forecasts agree, something else is going to happen.”Right now, almost everyone is expecting a recession driven by high inflation, rising interest rates and geopolitical risks. The S&P 500 is still more than 10% off of its highs, while the NASDAQ 100 is down by more than 20%. Many feel as if more downside is ahead, but what if they’re wrong? What if the bottom is already in? What if the worst is over?
My take? I have no idea. I believe there’s still a bigger and more traditional classic “risk-off” period coming where stocks decline and Treasuries rally in price (which is what historically happens during periods of heightened equity volatility), but the path to get there is what drives investor sentiment. And like everyone else in this business, I can’t tell the future. All I can do is identify conditions in a rules-based fashion that favor an outcome.The important thing to remember here is that the market isn’t the economy. The financial markets are often leading indicators of where investors feel things are going. The actual data is only showing how conditions are or were.
Take the 2020 COVID recession, for example. Once the government announced its multi-trillion dollar stimulus program, stock prices shot higher even though the worst of the economic pain had yet to be experienced.Today, some of the data isn’t even indicating imminent danger.
High yield spreads tend to blow out ahead of a recession. They’re currently not at the levels reached during 2016, 2018 or 2020. Investors often view the 10-year/2-year Treasury yield spread as the “recession indicator”. This number did briefly turn negative earlier this year, but has remained in positive territory ever since. While both of these numbers have teased the idea of higher risk conditions ahead, neither has done so in convincing fashion yet.Also consider that the markets tend to be very sensitive to what the Fed does. If the central bank ever decides that recession risk is too high and it hits the pause button on the rate hiking cycle, it could be off to the races again for equity prices. Risk asset prices have the ability to react favorably to looser monetary conditions. Any pivot in that direction could give a big boost to investor sentiment.
If the bear market is over, the ATAC Rotation Fund (ATACX), the ATAC U.S. Rotation ETF (RORO) and the ATAC Credit Rotation ETF (JOJO) could be primed to benefit.We believe all three funds use proven market signals to determine whether they should be positioned either offensively or defensively. Since investors often flock to safety in times of market volatility, the three funds use Treasuries as the “risk-off” or defensive asset class. Admittedly, Treasuries haven’t acted as they historically do relative to equities when in high volatility states. But that doesn’t mean things won’t revert back to historical behavior in the small sample of the here and now.When the signals suggest that conditions are more favorable, the funds can go “risk-on”.
In the case of RORO and ATACX, that could include some combination of large-cap stocks, small-caps and emerging markets. JOJO remains in the fixed income markets and targets junk bonds in this scenario.RORO and ATACX also use leverage, which offers higher return potential. Why? Because leveraging equities when risk-on helps to, over time, counter the impact of being in Treasuries when stocks continue to move higher and with hindsight, risk-off positioning there wasn’t warranted.
Of course this is a double-edged sword, since in a year like this year, the leveraged risk-on position in stocks earlier in the year led to a sizeable decline for both ATACX and RORO. However, over multiple roll of the die, it is that leverage which gives investors the opportunity to capture above average returns in more traditional markets when combined with occasional risk-off periods where Treasuries perform well.High volatility markets don’t need to be feared.
We believe strategies that add and remove market risk based on what the market is telling us give investors the opportunity to earn superior risk-adjusted returns while lowering downside risk. If the markets are ready to begin the next leg higher, the ATAC funds stand ready to benefit while (hopefully) Treasuries get back to doing what they normally would in true risk-off periods .
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Alzheimer’s new drug shows promise
Lecanemab, an Alzheimer’s drug from Eisai and Biogen, slowed cognitive decline in patients with early Alzheimer’s by 27% over 18 months in a final-phase trial, the companies said recently.
That rate of decline met the study’s targets and offers hope to the 6 million people in the US with Alzheimer’s that their dementia can be slowed down or delayed. The companies hope lecanemab will fare better commercially than their previous Alzheimer’s drug Aduhelm—which was a flop.
I was having lunch with a close friend of mine. He mentioned that he had accumulated a significant sum of money and did not know what to do with it. It was sitting in bonds, and inflation was eating its purchasing power at a very rapid rate.
He is a dentist and had originally thought about expanding his business, but a shortage of labor and surging wages turned expanding into a risky and low-return investment. He complained that the stock market was extremely expensive. I agreed.*
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Bank of England steps in to soothe markets. The Bank of England moved to quell the market panic caused by the British government’s recent announcement of major tax cuts, saying it would buy 65 billion pounds ($69 billion) worth of bonds and push off its plans to sell bonds to prevent “a material risk to UK financial stability.”
So, it looks like the central bank did manage to get investors to keep calm and carry on: The pound, which had been crashing, stabilized and bond markets across the globe rallied after the news came out.
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
Re-Thinking Strategic Allocation
[By Dr. David Edward Marcinko MBA]
Many successful physician investors, retirement account managers or endowment fund administrators will establish a “strategic” allocation policy that is intended to guide long-term (greater than one-year) investment decisions.
Thinking Long Term?
This strategic allocation reflects the endowment’s thinking regarding the existence of perceived fundamental shifts in the market. Most endowments will also establish a target range or band for each asset class. The day-to-day managers then have the flexibility to make tactical decisions for a given class so long as they stay within the target range.
Terms
The term “tactical” when used in the context of investment strategy refers to the investor or manager’s ability to take advantage of short-term (under one year) market anomalies such as pricing discrepancies between different sectors or across different styles.
Assessment
Historically, tactical decisions with respect to asset allocation were derided as “market timing.” However, market timing implies moving outside of the target ranges whereas tactical decision making simply addresses the opportunistic deployment of funds within the asset class target range.
So, what do you think?
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
SE OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Wall Street HIT with $2 billion in fines!
The three-martini lunch may dwindle to two after a dozen of the largest finance firms agreed to pay more than two billion dollars to settle probes from the SEC and CFTC.
Those regulators claimed that the banks failed to adequately manage employee communication.
And, for the second time in a decade, Regions Bank was found to have charged illegal overdraft fees, the government in a settlement that will require the bank to repay $141 million to customers and pay an additional $50 million in fees.
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Domestic Markets: The Dow and the S&P 500 both snapped six-day losing streaks after the Bank of England stepped in to calm investor fears about its teetering markets. That announcement helped crashing bonds recover in a big way, and the 10-year US Treasury yield (which moves inversely to prices) posted its biggest one-day drop since 2009.
Posted on September 29, 2022 by The D.E.A. ROGUE WARRIOR
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By Staff Reporters
The OTCQB, also called “The Venture Market,” is the middle tier of the over-the-counter (OTC) market for U.S. stocks. It was created in 2010 and consists mainly of early-stage and developing U.S. and international companies that are not yet able to qualify for the OTCQX but are not as speculative as the lowest-tier Pink Sheets.
The OTCQB replaced the Financial Industry Regulatory Authority (FINRA)-operated OTC Bulletin Board (OTCBB) as the main market for trading OTC securities that report to a U.S. regulator. As it has no minimum financial standards, the OTCQB often includes shell companies, penny stocks, and small foreign issuers.
The Federal Reserve now owns $2.6 trillion in mortgages. That means about 24 percent of all outstanding residential mortgages in this whole big country reside in the central bank.
Posted on September 28, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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An index tracking US home prices posted a monthly drop in July for the first time since 2012, signaling the end of a decade long bull market that went sky-high during Covid-19.
Expensive West Coast metros—San Francisco, Seattle, and San Diego—saw the biggest declines.
OK – I was a Certified Financial Planner® before my academic team launched the Certified Medical Planner™ online and on-ground chartered education and board certification designation program a few years ago. I am now CFP reformed and in remission.
Enter the Certified Medical Planner™ CharteredDesignation
Today, we are of course, gratified that Certified Medical Planner™ mark notoriety is growing organically in the healthcare, as well as financial services, industry.
Even uber-blogger Mike Kitces MSFS, MTAX, CFP, CLU, ChFC, RHU, REBC, CASL has taken note of us in his musings on the Nerd’s Eye View website. And, the reality is that there are a growing number of CFP educational programs at the post-CFP niche market level.
But, none for healthcare industrial complex: for doctors … by doctors!
Popularity of our Text Books
However, it is our modern, innovative and proprietary Certified Medical Planner™ textbooks and dictionaries that have exploded in the academic marketplace.
In fact, they are now redacted in thousands of medical, graduate, law and B-schools and libraries, as well as colleges and universities throughout the nation. This includes the Library of Congress, National Institute of Health and the Library of Congress.
What Gives?
We have been told that this textbook popularity and publishing success is because of their balanced and peer-reviewed nature; something not very widespread in the financial services industry that is prone to gross and overstated advertising, salesmanship and marketing hyperbole. And, for this we are very gratified.
But, is there another reason our books are so popular?
A bit of networking and research suggests that interested folks may be eschewing the actual course work in favor of just the high quality textbooks! UGH!
So, what do you think? Matriculation with the professional mark versus self study without the designation mark. Please opine.
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.
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According to Rick Kahler MS CFP® ChFC CCIM[www.KahlerFinancial.com] real estate is one of the largest asset classes in the world. The family home is the largest asset many middle-class Americans own. And, real estate makes up a significant portion of the net worth of many wealth accumulators. Directly owning real estate is not an investment for the faint of heart, the armchair investor, or the uneducated. Most wealth accumulators would do well to leave direct ownership of real estate to the pros and invest in real estate investment trusts (REITs) instead [personal communication].
Still, as we have seen, the lure of investing in a tangible asset like real estate is enticing for high risk tolerant physician-investors who need a sense of control and interaction with their investments. If you are among them, here are a few guidelines that may keep you on a profitable path.
1. Don’t attempt to purchase investment real estate without the help of a commercial real estate specialist who is a fiduciary bound to look out for your best interest. Engage a Certified Commercial Investment Member (CCIM) with years of training and experience in analyzing and acquiring investment real estate. To find a CCIM near you, go to http://www.ccim.com.
2. You will sign a disclosure agreement that will tell you who the Realtor represents. Be sure the Realtor you engage represents you and not the seller, both parties, or neither party.
3. Never trust the income and expense data provided by the seller’s Realtor. While a seller represented by a CCIM will have a greater chance of supplying you with accurate data, most will significantly understate expenses and overstate the capitalization rate. Selling Realtors often understate the average annual cost of repairs and maintenance. I estimate this annual expense at 10%.
4. Another often understated expense is management. Many owners manage their own properties, so the selling broker doesn’t include an estimate for management expenses. They should. Real estate doesn’t manage itself, ever. You will either need to hire professional management or do your own management (always a scary proposition). Even if you do it yourself, you have an opportunity cost of your time, so you must include a management fee in the expenses. Most small residential apartments and single-family homes will pay 10% of their rents to a manager.
5. You must verify all the costs presented to you by the seller’s Realtor. Demand copies of at least the last three and preferably five years of tax returns. Research items like utility bills, property taxes, legal fees, insurance costs and repairs, maintenance costs, replacement reserves, tax preparation and all management fees. As a rule of thumb, expenses will average 40% of rental income on average-aged properties where the tenants pay all utilities except water. Newer properties may have expenses as low as 35%, while older properties can be as high as 50%.
6. By subtracting the vacancy rate and stabilized expenses from the rent, you will find the net operating income. This is the income you will put in your pocket—assuming the property is paid for. By dividing the net operating income by the purchase price, you will find the return you will receive on your investment, called the capitalization or “cap” rate. In Rapid City SD, for example, the cap rate tends to be 4% for single-family homes, 5% to 8% for duplexes to eight-plexes, and 8% to 12% for larger residential and commercial properties.
ASSESSMENT: Yes, physician-investors and all of us can build wealth with real estate. You just need to educate yourself, work hard, start conservatively, think long-term, and be prepared for lean years. This is not a quick or easy path to riches.
Posted on September 28, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Porsche Mega-IPO
Out of the ashes of this year’s brutal IPO market rises Porsche. The Volkswagen-owned luxury automaker will list shares publicly on the Frankfurt Stock Exchange this week, and if it hits its valuation target of $75 billion, it would be Europe’s third-largest IPO ever.
The Porsche IPO is penciled in for September 29th. It’s likely to be one of the largest in European stock market history, and could well be the financial event of the year.
Posted on September 28, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Bitcoin, the world’s largest digital asset by market value, fell as much as 1.2% to trade around $18,878, failing to sustain an earlier advance. Ether, the second-largest cryptocurrency, also dropped. Most major digital assets were posting declines as of 1:45 p.m. in New York.
The downturn occurred as US stocks turned lower, with the S&P 500 on pace for a sixth session of losses. Global financial markets have been gripped by volatility as central banks continue to promise that they’re going to keep raising interest rates to fight inflation that’s proven stickier than many had thought.
Posted on September 27, 2022 by The D.E.A. ROGUE WARRIOR
And … the Solow capital motion growth model?
[By staff reporters]
In economics, the Golden Rule savings rate is the rate of savings which maximizes steady state level or growth of consumption, as for example in the Solow growth model.
Although the concept can be found earlier in John von Neumann and Maurice Allais‘s works, the term is generally attributed to Edmund Phelps who wrote in 1961 that the golden rule “do unto others as you would have them do unto you” could be applied inter-generationally inside the model to arrive at some form of “optimum“, or put simply “do unto future generations as we hope previous generations did unto us.”
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The Solow growth model
In the Solow growth model, a steady state savings rate of 100% implies that all income is going to investment capital for future production, implying a steady state consumption level of zero. A savings rate of 0% implies that no new investment capital is being created, so that the capital stock depreciates without replacement. This makes a steady state unsustainable except at zero output, which again implies a consumption level of zero.
Somewhere in between is the “Golden Rule” level of savings, where the savings propensity is such that per-capita consumption is at its maximum possible constant value.
Assessment
Put another way, the golden-rule capital stock relates to the highest level of permanent consumption which can be sustained.
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.
Subscribe: MEDICAL EXECUTIVE POST for curated news, essays, opinions and analysis from the public health, economics, finance, marketing, IT, business and policy management ecosystem.
Posted on September 27, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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US stocks closed lower as markets dim view of the UK’s new budget plan weighed on markets.
US bond yields soared with the 10-year up as much as 21 basis points.
The British pound declined to a record low against the dollar at one point early in the day.
US stocks ended lower amid turmoil stemming from the reaction to the UK’s new budget plan, which includes some of the steepest tax cuts in decades and has led to fears of worsening inflation and government budget shortfalls.
Finally, extending its losses after a historically bad day on Friday, when the tax plan was announced, the British pound currency plunged as low as $1.035 in the early hours of this morning, before recovering in the afternoon amid speculation that the Bank of England would make a statement about the currency moves, and bets that policymakers would have to raise interest rates on an emergency basis.
Posted on September 26, 2022 by The D.E.A. ROGUE WARRIOR
Another Look at Expenses
By Rick Kahler MS CFP™
Annuities are popular investments; almost every new physician or other client I see has one. Part of any investment adviser’s due diligence is to understand the history and intentions of the investments in a portfolio.
When I ask why someone purchased an annuity, the most common responses are: “We didn’t have to pay any fees or commissions.” “There are no ongoing expenses.” “All my money is working for me.” “The principal is guaranteed.”
Warning … Warning!
Any time you read or hear “no fees,” “no commissions,” “no expenses,” “free,” or “guaranteed” used in conjunction with an investment, it’s a red flag. All investments, including annuities, have costs associated with them. You need to ask some probing questions about those costs before proceeding.
Fixed Annuity Example
Let’s look at the costs for one popular type of annuity, the fixed annuity. This simply gives you a stated rate of return that often can change annually, similar to a bank certificate of deposit.
Suppose Investor A is sold a fixed annuity with a guaranteed return of 3.5%. Investor B invests her money in a plain vanilla portfolio of mutual funds holding 60% stocks and 40% bonds, which has a long-term projected return of 6%.
The insurance company selling the annuity must earn enough of a return on Investor A’s money to cover their expenses, pay commissions, and return something to Investor A. There is no magic formula on how that’s done. The insurance company invests the money in the same asset classes available to anyone. For the sake of this example, it’s reasonable to assume the insurance company would hold the same 60/40 portfolio as Investor B.
The annuity incurs internal costs for administration, managing the money, insuring the return of principal, and commissions paid to salespeople. While these vary somewhat from company to company, a cost of 2.5% isn’t unreasonable.
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If the company earns 6% and deducts 1% to recoup the upfront commission paid to the salesperson, 1.0% for management costs, and 0.5% for administrative fees, they pay out the remainder as a “fixed” return of 3.5%. Investor A only sees that 3.5% fixed return. If Investor A wants out of the policy before the cost of the up-front commission is fully recovered (usually 4 to 15 years), he will also incur a “surrender penalty” that is approximately equal to the remaining amount of commission paid to the broker selling the policy.
Investor B’s 60/40 portfolio will have the same 6% gross return as the insurance company’s portfolio. If Investor B purchases index funds from a company like Vanguard, her costs could be as low as 0.10%, leaving her a return of 5.9%.
Suppose Investors A and B each accumulates $1 million in retirement funds. The difference between Investor A’s guaranteed 3.5% return and Investor B’s average and unguaranteed 5.9% return is potentially an extra $2,000 a month in retirement income. Guarantees come with a cost.
Why Bother?
Given these numbers, you may wonder why anyone would purchase a fixed annuity? Why bother?
One reason is that many buyers don’t have the confidence that they can invest the money wisely or the stomach to watch the portfolio’s inevitable peaks and valleys.
Another reason is that most buyers don’t fully understand the costs.
Assessment
Unlike stocks, bonds, and mutual funds, most annuities are sold, not bought. I have never had a new client who independently purchased a no-load annuity. The annuities I typically see were sold by someone who received a commission. Commissions are not inherently bad, but in most cases they do inherently create a conflict of interest.
There are always fees associated with any investment. In my experience, the less transparent those fees are, the higher they are.
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:
Posted on September 26, 2022 by The D.E.A. ROGUE WARRIOR
Belgium’s Society for Worldwide InterBank Financial Telecommunications
A TIMELY FINANCIAL TOPIC
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By Staff Reporters
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Belgium’s Society for Worldwide Interbank Financial Telecommunications (SWIFT) runs a messaging service that facilitates transactions across 11,000+ financial institutions globally. Think of it as the “Gmail of global banking.”
Entities in every country except North Korea use SWIFT to shuffle trillions of dollars’ worth of funds across borders. And Russia is a SWIFT power user—as a major supplier of energy and other goods, it ranks sixth globally for payment messages sent on SWIFT. So if Russia were cut off from SWIFT, “the nation would essentially be severed from much of the global financial system,” the NYT wrote.
Posted on September 26, 2022 by The D.E.A. ROGUE WARRIOR
What it is – How it works
SMART CONTRACTS
[By Staff Reporters]
Wolfram Alpha is an online mathematical search engine launched in March 2009 and developed by Stephen Wolfram. It seeks to answer factual queries directly by computing the answer from structured data, rather than providing a list of web pages that might contain the answer.
In this way, WA differs from traditional semantic search engines, which index a large number of answers and then try to match the question to one. Wolfram Alpha has many parallels with Cyc, a project aimed since the 1980s at developing a common-sense inference engine. Wolfram Alpha is built on Wolfram’s earlier flagship product, Mathematica, which encompasses computer algebra, symbolic and numerical computation, visualization, and statistics capabilities.
With Mathematica running in the background, WA is suited to answer mathematical questions. The answer usually presents a human-readable solution.
Wolfram Alpha is written in about 5 million lines of Mathematica (using webMathematica and gridMathematica) code and runs on 10,000 CPUs. As well as being a web site, Wolfram Alpha provides an API (for a fee) that delivers computational answers to other applications. One such application is the Bing search engine.
Capabilities
As an example, one can input the name of a website, and it will return relevant information about the site, including its location, site rank, number of visitors and more. The database currently includes hundreds of datasets, including current and historical weather, drug data, star charts, currency conversion, and many others. The datasets have been accumulated over approximately two years, and are expected to continue to grow. The range of questions that can be answered is also expected to grow with the expansion of the datasets.
Wolfram Alpha is ideal for use by all readers and subscribers of the ME-P. It may be used by doctors, nurses, financial advisors and insurance agents, economists, mathematicians, editors, and publishers, teachers and students of all academic levels. The graphical nature of output is particularly helpful.
Assessment
Wolfram Alpha has received mixed reviews, to date. Advocates point to its potential, some even stating that how it determines output result is more important than current usefulness.
And so, your thoughts and comments on this ME-P are appreciated. Give Wolfram Alpha a click, listen to the audio-cast, and tell us what you think. 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.
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OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
Disposablecredit cards are the newest innovation to help reduce fraud and assumed identity scams on e-commerce based websites. As with traditional credit cards, these cards are numbered, but used only once. Then, electronically they are erased so that there is nothing left in the merchant’s database for hackers to steal.
But, in 2014, Congress began looking at new ways to keep personal credit card information safe after several high-profile security breaches at some of America’s top retailers.
WHY? Current credit cards use easy to hack magnetic strip technology from the 1960s. Many consumers want more secure “pin & chip” cards which have been in use in Europe for years. Even though micro-chip technology costs billions to implement, merchants are moving in that direction as they issue new cards to consumers. Most modern polls show nearly half of all people surveyed are extremely concerned about the safety of their personal credit card information.
Burner Cards: Similar to a burner phone or “throwaway” social media account, burner credit cards are temporary, virtual credit cards that are not your “main” credit card. The bank or burner card app will give you a temporary number that links back to your main credit card which you can use for online purchases.
An ANonymousCreditCard provides an extreme degree of privacy and prevents the tracking of your expenses by a spouse, people with bad intentions or government monitoring agencies. It is important to realize that there are plenty of legitimate reasons for wanting to buy something discreetly through an AnonymousCreditCard.
Credit Card Mistakes to Avoid
No number has as far-reaching an impact on your money as your credit scores.
Here are some obstacles, physicians and all of us, should dodge on the road to financial security:
If you are denied a credit card, you have the right to obtain a credit report free from the agency which denied you. Your request must be made in writing and within thirty-sixty days. Consumer credit is governed by the Fair Credit Reporting Act (FCRA). The regulations are issued by and enforced by the Federal Trade Commission. Certain states offer consumers additional rights. Credit reporting agencies are referred to as a “consumer reporting agency”.
Posted on September 25, 2022 by The D.E.A. ROGUE WARRIOR
A Private Investment in Public Equity
By Staff Reporters
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A private investment in public equity (PIPE) is a transaction in which a publicly traded company sells shares to accredited investors via a private placement.
In a PIPE transaction, an investor commits to buying a certain number of shares at a fixed price and, in exchange, the issuer provides a resale registration statement.
In a non-traditional PIPE transaction, the security price may be variable instead of fixed, and investors must pay before receiving the resale registration statement in return.
While PIPE transactions can be advantageous to both the firm and the accredited investor, most investors can’t participate, and the deal may dilute the shares of existing stockholders.
Posted on September 25, 2022 by The D.E.A. ROGUE WARRIOR
What it is – How it works
[By Staff reporters]
There is no shortage of analysis for anyone interested in investing. A search for the term “stock market analysis” turned up 16 million hits on Google and well over 200,000 hits each on Bing, and Yahoo.
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The majority of stock market analysis can be lumped into three broad groups: fundamental, technical, and sentimental. Here’s a close look at SA.
Sentimental Analysis
Sentimental analysis attempts to measure the market in terms of the attitudes of investors. Sentimental analysis starts from the assumption that the majority of investors are wrong. In other words, that the stock market has the potential to disappoint when “masses of investors” believe prices are headed in a particular direction.
Sentiment analysts are often referred to as contrarians who look to invest against the majority view of the market.
For example, if the majority of professional market watchers expect a stock price to trend higher, sentiment analysts may look for prices to disappoint the majority and trend lower.
Which approach is best?
There is no clear answer to that question.
But it’s important to remember three things:
Past performance does not guarantee future results, actual results will vary, and the best approach may be to create a portfolio based on your time horizon, risk tolerance, and goals.
Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change.
And shares, when sold, may be worth more or less than their original cost.
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.
Subscribe: MEDICAL EXECUTIVE POST for curated news, essays, opinions and analysis from the public health, economics, finance, marketing, IT, business and policy management ecosystem.
Posted on September 24, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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It’s useful to look at stock market levels compared to where they’ve been over the past few months. When the S&P 500 is above its moving or rolling average of the prior 125 trading days, that’s a sign of positive momentum. But if the index is below this average, it shows investors are getting skittish.
Momentum is the speed or velocity of price changes in a stock, security, or tradable instrument.
Momentum shows the rate of change in price movement over a period of time to help investors determine the strength of a trend.
Investors use momentum to trade stocks whereby a stock can exhibit bullish momentum–the price is rising–or bearish momentum–the price is falling.
The Fear & Greed Index uses slowing momentum as a signal for Fear and a growing momentum for Greed.
Posted on September 24, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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What is Delta?
FINANCE: Delta is a risk sensitivity measure used in assessing derivatives. It is one of the many measures that are denoted by a Greek letter. The series of risk measures that use such letters are fittingly referred to as the Greeks. They are often also called risk measures, hedge parameters, or risk sensitivities.
ACCOUNTING: Delta is the ratio of the change in price of an option to the change in price of the underlying asset. Also called the hedge ratio; For a call option on a stock, a delta of 0.50 means that for every $1.00 that the stock goes up, the option price rises by $0.50.
Posted on September 24, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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The OTCQX® Best Market offers transparent and efficient trading of established, investor-focused U.S. and global companies.
To qualify for the OTCQX market, companies must meet high financial standards, follow best practice corporate governance, demonstrate compliance with U.S. securities laws, and have a professional third-party sponsor introduction.
Penny stocks, shells and companies in bankruptcy cannot qualify for OTCQX.
The companies found on OTCQX are distinguished by the integrity of their operations and diligence with which they convey their qualifications.
Posted on September 24, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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U.S. stocks closed sharply lower with the Dow Jones Industrial Average ending at its lowest closing value since November 2020. All three major benchmarks suffered another week of losses as bond yields rose in the wake of the Federal Reserve’s interest rate hike on Wednesday.
The Dow Jones Industrial Average shed 486.27 points, or 1.6%, to close at 29,590.41.
The S&P 500 dropped 64.76 points, or 1.7%, to finish at 3,693.23.
The NASDAQ Composite slid 198.88 points, or 1.8%, to end at 10,867.93.
For the week, the Dow dropped 4% while the S&P 500 slid 4.6% and the NASDAQ tumbled 5.1%, according to Dow Jones Market Data. All three major indexes declined for a second straight week.
Posted on September 24, 2022 by The D.E.A. ROGUE WARRIOR
Bigger is NOT Always Better
[By staff reporters]
The size effect in finance literature refers to the observation that smaller firms have higher returns than larger firms, on average over long horizons. It also describes the contribution that firm size has in explaining stock returns.
Posted on September 23, 2022 by The D.E.A. ROGUE WARRIOR
By Staff Reporters
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Equity markets declined for the third straight day in the wake of the U.S. Federal Reserve‘s most recent increase to the benchmark interest rate.
The S&P 500 fell 31.94 points, or 0.84%, to 3,757.99, while the Dow Jones Industrial Average declined by 107.1 points, or 0.35%, to 30,076.68. The NASDAQ Composite dropped 153.39 points, or 1.37%, to 11,066.80.
All three indexes are on pace to end the week in the red, as investors worry continued rate hikes meant to combat high inflation, could result in a recession.
Posted on September 23, 2022 by The D.E.A. ROGUE WARRIOR
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By Staff Reporters
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Marking to Market (MTM) means valuing the security at the current trading price. Therefore, it results in the traders’ daily settlement of profits and losses due to the changes in its market value.
Suppose on a particular trading day, the value of the security rises. In that case, the trader taking a long position (buyer) will collect the money equal to the security’s change in value from the trader holding the short position (seller).
On the other hand, if the security value falls, the selling trader will collect money from the buyer. The money is equal to the change in the value of the security. It should be noted that the value at maturity does not change much. However, the parties involved in the contract pay gains and losses to each other at the end of every trading day.
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Examples of Mark to Market
An exchange marks traders’ accounts to their market values daily by settling the gains and losses that result due to changes in the value of the security. There are two counterparties on either side of a futures contract—a long trader and a short trader. The trader who holds the long position in the futures contract is usually bullish, while the trader shorting the contract is considered bearish.
If at the end of the day, the futures contract entered into goes down in value, the long margin account will be decreased and the short margin account increased to reflect the change in the value of the derivative.
An increase in value results in an increase in the margin account holding the long position and a decrease in the short futures account.
According to investopedia, for example, to hedge against falling commodity prices, a wheat farmer takes a short position in 10 wheat futures contracts on November 21st. Since each contract represents 5,000 bushels, the farmer is hedging against a price decline on 50,000 bushels of wheat. If the price of one contract is $4.50 on Nov. 21st. the wheat farmer’s account will be recorded as $4.50 x 50,000 bushels = $225,000.
Day
Futures Price
Change in Value
Gain/Loss
Cumulative Gain/Loss
Account Balance
1
$4.50
225,000
2
$4.55
+0.05
-2,500
-2,500
222,500
3
$4.53
-0.02
+1,000
-1,500
223,500
4
$4.46
-0.07
+3,500
+2,000
227,000
5
$4.39
-0.07
+3,500
+5,500
230,500
Because the farmer has a short position in wheat futures, a fall in the value of the contract will result in an increase in their account. Likewise, an increase in value will result in a decrease in account value. For example, on Day 2, wheat futures increased by $4.55 – $4.50 = $0.05, resulting in a loss for the day of $0.05 x 50,000 bushels = $2,500. While this amount is subtracted from the farmer’s account balance, the exact amount will be added to the account of the trader on the other end of the transaction holding a long position on wheat futures.
The daily mark to market settlements will continue until the expiration date of the futures contract or until the farmer closes out his position by going long on a contract with the same maturity.
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