BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Posted on May 18, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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Walgreens has released its own brand of naloxone, a medication that reverses the effects of an opioid overdose. Available online now, Walgreens Brand Naloxone HCl Nasal Spray comes with two doses for $34.99, about $10 cheaper than the name-brand version, Narcan. The over-the-counter medication will also be available in stores by the end of May in the pain aisle, according to a press release, making the life-saving nasal spray more accessible.
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Here’s where the major benchmarks ended:
The S&P 500 index rose 6.17 points (0.1%) to 5,303.27, up 1.5% for the week; the Dow Jones Industrial Average gained 134.21 points (0.3%) to 40,003.59, up 1.2% for the week; the NASDAQ Composite® ($COMP) lost 12.35 points (0.1%) to 16,685.97, up 2.1% for the week.
The 10-year Treasury note yield (TNX) rose more than 4 basis points to 4.42%, down about 8 basis points for the week.
The CBOE Volatility Index® (VIX) fell 0.43 to 11.99.
Among major companies, Nvidia (NVDA) dropped 2% Friday but still posted a 2.9% advance for the week ahead of the semiconductor leader’s quarterly earnings Wednesday. Among sectors, energy shares led gainers behind a 1% jump in WTI Crude Oil (/CL) futures. The small-cap Russell 2000® Index (RUT) ended little changed but still gained 1.7% for the week.
Check back periodically for practical updates. Our catalogue library of major books, texts, case models and dictionaries is suggested for additional financial, economic, business and medical practice management information and education.
Posted on May 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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America’s oldest popular stock index, the Dow Jones Industrial Average, hit a brief record high yesterday morning when it traded above 40,000, reflecting renewed hope for the market’s health after Wednesday’s promising inflation report.
The S&P 500® index (SPX) fell 11.05 points (0.2%) to 5,297.10; the Dow Jones Industrial Average declined 38.62 points (0.1%) to 39,869.38; the NASDAQ Composite® ($COMP) shed 44.07 points (0.3%) to 16,698.32.
The 10-year Treasury note yield (TNX) rose more than 2 basis points to 4.381%.
The CBOE Volatility Index® (VIX) dropped 0.03 to 12.42.
Walmart’s strength fueled a strong day for consumer staples shares. The S&P 500 Consumer Staples ($SP500#30), which includes Walmart as well as companies like Coca-Cola (KO) and Procter & Gamble (PG), surged 1.5% to its highest level in over two years.
Among other companies, Applied Materials (AMAT) fell 1.6% ahead of the semiconductor industry supplier’s quarterly earnings report, which is expected after Thursday’s close.
And, Core CPI, which tracks the price of goods and services excluding volatile food and energy prices and is closely watched as an inflation indicator, rose 3.6% from the same period last year. That’s the smallest annual increase since April 2021. On a monthly basis, core CPI rose 0.3%, marking the first time in six months that its growth slowed from the prior month. Other good signs include:
Grocery prices dropped 0.2% from March, the first decrease in a year.
Health insurance and car insurance increased more slowly in April than in March.
A separate report released yesterday showed consumer spending stayed steady last month.
Finally, Joe Manchin (D-W.Va.) and a group of Republican senators are moving to overturn a retirement investment planning rule that was finalized by the Labor Department last month. The Labor Department unveiled the new rule last month that would update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act. Manchin and 15 Republican senators joined in co-sponsoring a Congressional Review Act (CRA) resolution that would overturn this new rule.
Posted on May 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The Dow Jones Industrial Averagebriefly crossed 40,000 for the first time, a milestone that appeared implausible little more than two years ago when the Federal Reserve began raising interest rates to cool an overheated economy.
Gloom and doom forecasts abounded. When the central bank ended the era of low rates that prevailed in the years following the global financial crisis, economists predicted painful consequences: a U.S. recession and rising unemployment.
Posted on May 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
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More people are interested in determining their “heart age” using new tests and tech tools, but some skeptics say it’s not a healthy data point to focus on. (the Wall Street Journal)
The Cathie Wood-led Ark Invest just made some significant trades. The most prominent among them were the increased stakes in Palantir Technologies Inc (NYSE:PLTR) and the reduced holdings in Coinbase Global Inc (NASDAQ: COIN).
Here’s where the major benchmarks ended:
The S&P 500 index rose 61.47 points (1.2%) to 5,308.15; the Dow Jones Industrial Average added 349.89 points (0.9%) to 39,908.00; the NASDAQ Composite rallied 231.21 points (1.4%) to 16,742.39.
The 10-year Treasury note yield fell almost 10 basis points to 4.348%.
The CBOE Volatility Index® (VIX) dropped 0.97 to 12.45.
Chipmaker shares led the way higher Wednesday, lifting the Philadelphia Semiconductor Index (SOX) almost 3% to a 10-week high. Interest-rate-sensitive sectors like real estate and utilities were also strong. The small-cap Russell 2000® Index (RUT) advanced 1.1% to a seven-week high. The U.S. Dollar Index ($DXY) slumped to its weakest level in five weeks, reflecting expectations for lower interest rates that may reduce the appeal of U.S. fixed income assets.
Among companies, Cisco Systems (CSC) surged 1.5% ahead of its quarterly results expected after Wednesday’s close. Dow member Walmart (WMT) is expected to release results Thursday morning as the unofficial retail earnings season accelerates.
And … The U.S. Department of Justice (DOJ) announced it has established a new task force to take on healthcare monopolies and collusion. The task force, made up of prosecutors, economists, healthcare industry experts and others, will guide the division’s enforcement strategy and policy approach in healthcare, including by facilitating policy advocacy, investigations and, where warranted, civil and criminal enforcement in healthcare markets.
Posted on May 15, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
The S&P 500® index (SPX) rose 25.26 points (0.5%) to 5,246.68, the highest since a record close March 28; the Dow Jones Industrial Average® ($DJI) gained 126.60 points (0.3%) to 39,558.11; the NASDAQ Composite climbed 122.94 points (0.8%) to 16,511.18.
The 10-year Treasury note yield (TNX) fell more than 3 basis points to 4.449%.
The CBOE Volatility Index® (VIX) decreased 0.18 to 13.42.
Among companies, Home Depot’s (HD) quarterly results reported earlier Tuesday kicked off the unofficial start of the retail earnings season. The home improvement retailer’s earnings topped expectations, but revenue missed forecasts, initially sending the company’s shares down sharply.
Home Depot also reaffirmed its full-year guidance for a 1% decline in comparable-store sales and a 1% increase in total sales. The company’s shares bounced back to end with a 0.1% loss.
And, the Cathie Wood-led Ark Invest just made some significant trades. The most prominent among them were the increased stakes in Palantir Technologies Inc (NYSE PLTR) and the reduced holdings in Coinbase Global Inc (NASDAQ: COIN).
Moreover, the website-building platform Squarespace is to go private, which it announced it’ll be doing in an all-cash deal with Permira, a private equity firm. Squarespace, which was public for nearly three years, joins a group of other smaller tech companies like Qualtrics that have recently pulled themselves off the public market. (CNBC)
Employers and private insurers are paying hospitals more for inpatient and outpatient services than in previous years, a study from RAND Corporation finds. The American Hospital Association dismissed the report saying it offers a “skewed and incomplete picture.”
And finally … Kaiser Permanente began its 2024 earnings season with more than $2.7 billion in net income and $935 million in operating income, just months after sharing plans to lay off workers.
Posted on May 14, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
The S&P 500® index (SPX) fell 1.26 points (0.02%) to 5,221.42; the Dow Jones Industrial Average lost 81.33 points (0.2%) to 39,431.51; the NASDAQ Composite® ($COMP) gained 47.37 points (0.3%) to 16,388.24.
The 10-year Treasury note yield (TNX) dropped almost 2 basis points to 4.487%.
The CBOE Volatility Index® (VIX) surged 1.05 to 13.60.
Biotechnology and food and beverage shares were among the market’s strongest sectors Monday, while communication services stocks were among the biggest laggards. Energy shares took pressure despite a jump of 1.2% in WTI Crude Oil (/CL) futures, which ended above $79 per barrel after slumping last week to two-month lows.
Moderna is “bleeding money” as its forthcoming RSV vaccine doesn’t appear to deliver better results than other RSV shots already on the market. (Bloomberg)
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It’s ChatGPT-4o’s time to shine. The “o” stands for omni, and it’s the latest iteration of OpenAI’s signature chatbot. According to the company, it’s much faster with enhanced “capabilities across text, vision, and audio.”
One relatively recent performance evaluation approach that was developed to help improve the relevance of comparisons is the separation of stock universes and managers by style. This classification method attempts to distinguish between stocks or manager philosophies based upon general financial characteristics of the investments.
The Managers
In very general terms, a manager is often a growth manager if the investment approach that the manager uses focuses on stocks showing growth and momentum in its earnings and price.
A value manager is generally considered to be a manager that attempts to identify under-valued securities based upon fundamental analysis of the company. A stock may be considered either “growth” or “value” based on a given set of valuation measures such as price-to-earnings, price-to-book value, and dividend yield.
The Style
The goal of style-based performance comparisons is to take some of the biases of the market environment out of the comparison, since a portfolio’s returns will ideally be evaluated versus a universe of alternatives that represent similar investment characteristics facing the same basic market environment. Thus, if the environment is one in which investors in stocks with strong past earnings and price momentum have generally performed better than those using fundamental analysis to find under-valued stocks, comparing the growth/momentum portfolio to a growth index or universe should help eliminate the bias.
Style-based universes can help the medical professional better understand the basic environment captured over a given performance time period.
However, there are significant limitations with the various approaches to constructing style-based stock and manager universes that should be understood if they are to be used in direct performance comparisons. Taking style-based stock universes separately from style-based manager universe, one of the most significant issues regarding the categorization of stocks by “growth” and “value” styles is the lack of agreement in the specification of what a growth stock is versus a value stock. With some universes divided by price-to-book value, others by price-to-earnings and/or dividend yields and some by combinations of similar variables, stocks are often classified very differently by two different stock universes. Further, stocks move across a broad spectrum as their price and fundamentals change, resulting in stocks constantly moving between growth and value categories for any given universe. If there is ambiguity in the rating of a given stock, then the difficulty is only compounded when we attempt to boil what may be complex investment processes of an investment manager or mutual fund portfolio manager to a simple classification of growth or value. A beaten down cyclical stock that no self-respecting growth/momentum manager would purchase may be classified as “growth” because it has a high price-to-earnings ratio (i.e., from low earnings) or a high price-to-book value (i.e., from asset write-offs). Value managers are not the only ones to own low valuation stocks that have improving earnings.
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The second problem with style categorization is that managers are often misclassified or they purposefully “game” the categorization of their own process in order to appear more competitive. As an example, if a manager that typically looks for relatively strong earnings/price momentum is lagging in a period when “growth” managers are outperforming, the rank of the manager can be improved simply by claiming a “value” approach. Morningstar’s “style box” classification of mutual funds by size and style of the current portfolio highlight this problem for any given fund by showing how their portfolio has changed its classification annually.
Current Events
The stock market has been booming lately. Up almost 100% since March 2009, after being down almost 50%. And so, perhaps this is a good time to re-evaluate the performance of your investment portfolio[s].
Assessment
However, this leads to an interesting question for the medical professional or his/her advisor: If a manager is still using the same basic investment philosophy and disciplines, but their “style” category has changed according to the ratings service, should you fire them? If the answer is “yes”, then the burden of monitoring and the cost of manager turnover are an inevitable part of narrow style based performance comparisons.
But, if the answer is “no,” then it is easy to see the difficulty of fitting every management approach into a simple style box. The more reasonable alternative is to use style-based stock and manager universes as a tool for understanding the environment, rather than an absolute performance benchmark.
Conclusion
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A Primer for Physician Investors and Medical Professionals
By: Dr. David Edward Marcinko; MBA, MEd, CMP™
[Editor-in-Chief]
[PART 2 OF 8]
NOTE: This is an eight part ME-P series based on a weekend lecture I gave more than a decade ago to an interested group of graduate, business and medical school students. The material is a bit dated and some facts and specifics may have changed since then. But, the overall thought-leadership information of the essay remains interesting and informative. We trust you will enjoy it.
Introduction
Despite the SEC restrictions, noted in Part I of this series, some idea of potential demand for a new security issue can be gauged and have a bearing on pricing decisions.
For example, as CEO of a medical instrument company, or interested investor, would you rather see a great deal of interest in a potential new issue or not very much interest? There is however, one kind of advertisement that the underwriter can publish during the cooling off period. It’s known as a tombstone ad. The ad makes it clear that it is only an announcement and does not constitute an offer to sell or solicit the issue, and that such an offering can only be made by prospectus. SEC Rule 134 of the 1933 Act itself, refers to a tombstone ad as “communication not deemed a prospectus” because it makes reference to the prospectus in the ad. Tombstones have received their name because of the sparse nature of details found in them.
However, the most popular use of the tombstone ad is to announce the effectiveness of a new issue, after it has been successfully issued. This promotes the success of both he underwriter, as well as the company.
Since distributing securities involves potential liability to the investment bank, it will do everything possible to protect itself. So, near the end of the cooling off period, a meeting is held between the underwriter and the corporation. It is known as a due diligence meeting. At this meeting they both discuss amendments that are going to be necessary to make the registration statement complete and accurate. The corporate officers, and the underwriters sign, the final registration statement. They have civil liability for damages that result from omissions of material facts or
Mis-statements of fact. They also have criminal liability if the distribution is done by use of fraudulent, manipulative, or deceptive means. Due diligence takes on a whole new meaning when incarceration from a half-hearted effort underwriting efforts can occur. The investment bank strives to ensure that there have been no material changes to the issuer or the terms of the issue since the registration statement was filed.
Again, as a physician, how would you feel if you were an investment banker raising capital for a new pharmaceutical company that had developed a drug product that was highly marketable. But, on the day after the issue was effective, there was a major news story indicating that the company was being sued for patent infringement? What effect do you think that would have on the market price of this new issue? It would probably plunge. How could this situation have been prevented? The due diligence meeting is more than a cocktail party or a gathering in a smoke filled room. Otherwise, the company would require specially trained people, to do a patent search lessening the likelihood of this scenario. At the due diligence meeting, work is done on the preparation of the final prospectus, but the investment bank does not set the public offering price or the effective date at this meeting. The SEC will eventually set the effective date for the registration and it is on that date that the final offering price will be determined.
Once the SEC sets the effective date, sales may be executed and money can be accepted by the investment bank. It is at this time that the final prospectus, similar to the red herring but without the red ink and with the missing numbers, is issued. A prospectus is an abbreviated form of the registration statement, distributed to purchasers, on and after the effective date of the registration. It is not the same as the registration statement. A typical registration statement consists of papers that stand more than a foot high; rarely does a prospectus go beyond 40 or 50 pages. All purchasers will receive a final prospectus and then it becomes permissible for the underwriter to provide sales literature.
In addition to the requirement that a prospectus must be delivered to a purchaser of new issues no later than with confirmation of the trade, there are two other requirements that healthcare executives investors should know.
90-day: When an issuer has an initial public offering (IPO), there is generally a lack of publicly available material relating to the operations of that issuer. Because of this, the SEC requires that all members of the underwriting group make available a prospectus on an IPO for a period of 90 days after the effective date.
4O-day: Once an issuer has gone public, there are a number of routine filings that must be made with the SEC so there is publicly available information regarding the financial condition of that issuer. Since additional information is now available, the SEC requires that, on all issues other than IPOs, any member of the underwriting group must make available a prospectus for a period of 40 days after the effective date.
In the event that the investment bankers misgauged the marketplace, and the issue moves quite slowly, it is possible that information contained in the prospectus would be rendered obsolete by the SEC. Specifically, the SEC requires that any prospectus used more than 9 months after the effective date, may not have any financial information more than 16 months old. It can however, be amended or stickered, with updated information, as needed.
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Syndication Among Underwriters
Because the investment banking firm may be underwriting (distributing) a rather large dollar amount of securities, to spread its risk exposure, it may form a group made up of other investment bankers or underwriters, known as a syndicate. The syndicate is headed by a syndicate manager, or lead underwriter, and it is his job to decide whether to participate in the offering. If so, the managing underwriter will sign a non-binding agreement called a letter of intent. .
If all has gone well and the market place is sufficiently interested in the security, and the SEC has been satisfied with respect to the registration statement, it is time for all parties to the offering to formalize their relationships with a contract including the basic understandings reflected in the letter of intent. Three principal underwriting contracts are involved in the usual public offering, each serving a distinct purpose. These are the: Agreement among Underwriters, Underwriting Agreement, and the Dealer Agreement.
In the Agreement Among Underwriters (AAU), the underwriters committing to a portion of the issue, enter into an agreement establishing the nature and terms of their relationship with each other. It designates the syndicate manager to act on their behalf, particularly to enter into an Underwriting Agreement with the issuer, and to conduct the offering on behalf of each of them. The AAU will designate the managing underwriter’s compensation (management fee) for managing the offering.
The authority to manage the offering includes the authority to: agree with the issuer as to the public offering price; decide when to commence the offering; modify the offering price and selling commission; control all advertising; and, control the timing and effectiveness of the registration statement by quickly responding to deficiency letters. Each underwriter agrees to purchase a portion of the underwritten securities, which is known as each under-writer’s allotment (allocation). It is normally signed severally, but not jointly, meaning each underwriter is obligated to sell his allocation but bears no financial obligation for any unsold allotment of another underwriter. This is referred to as a divided account or a Western account. Much less frequently, an undivided or Eastern account, will be used. Each underwriter is responsible for unsold allotments of others, based upon a proportionate share of the offering.
The above comments referred to firm commitment underwriting. Another type of underwriting commitment however, is known as best efforts underwriting. Under the terms of best efforts underwriting, the underwriters make no commitment to buy or sell the issue, they simply do the best they can, acting as an agent for the issuer, and having no liability to the issuer if none of the securities are sold. There is no syndicate formed with a best efforts underwriting. The investment bankers form a selling group, with each member doing his best to sell his allotment. Two variations of a best efforts underwriting are: the all-or-none, and the mini-max (part-or-none) underwriting. Under the provisions of an all-or-none offering, unless all of the shares can be distributed within a specified period of time, the offering will terminate and no subscriptions or orders will be accepted or filled. Under mini-max, unless a set minimum amount is sold, the offering will be terminated.
SEC Rule 15c2-4 requires the underwriter to set up an escrow account for any money received before the closing date, in the event that it is necessary to return the money to prospective purchasers. If the “minimum”, or the “all” contingencies are met, the monies in escrow go to the issuer with the underwriters retaining their appropriate compensation. In order to make sure that investors are properly protected, the escrow account must be maintained at a bank for the benefit of the investors until every appropriate event or contingency has occurred. Then, the funds are properly returned to the investors. If the money is to be placed into an interest bearing account, it must have a maturity date no later than the closing date of the offering, or the account must be redeemable at face with no prepayment penalty as regards principal.
Underwriter Compensation Hierarchy
As we have seen, in a firm commitment the underwriter buys the entire issue from the issuer and then attempts to resell it to the public. The price at which the syndicate offers the securities to the public is known as the public offering price. It is the price printed on the front page of the prospectus.
However, the managing underwriter pays the issuer a lower price than this for the securities. The difference between that lower price and the public offering price is known as the spread or underwriting discount. Everyone involved in the sale of a new issue is compensated by receiving part of the spread. The amount of the spread is the subject of negotiations between the issuer and the managing underwriter, but usually is within a range established by similar transactions between comparable issuers and underwriters. The spread is also subject to NASD [now FINRA] review and approval before sales may commence. The spread is broken down by the underwriters so that a portion of it is paid to the managing underwriter for finding and packaging the issue and managing the offering (usually called the manager’s fee); and a portion is retained by each underwriter (called the underwriting or syndicate allowance) to compensate the syndicate members for their expenses, use of money, and assuming the risk of the underwriting. The remaining portion is allocated to the selling group and is called selling concession. It is often useful to remember the compensation hierarchy pecking order in the following way:
Spread (syndicate manager).
Underwriters allowance (syndicate members)
Selling concession (selling group members)
Re-allowance (any other firm)
While the above deal with corporate equity, the only other significant item with respect to corporate debt is the Trust Indenture Act of 1939. This Federal law applies to public issues of debt securities in excess of $5,000,000. The thrust of this act is to require an indenture with an independent trustee (usually a bank or trust company) who will report to the holders of the debt securities on a regular basis.
Successful marketing of a new issue is a marriage between somewhat alien factors: compliance and numerous Federal, state, and self-regulatory rules and statutes; along with finely honed and profit-motivated sales techniques. It’s not too hard to see that there could be a real, or apparent, conflict of interest here. Most successful investment bankers have built their excellent reputations upon their ability to properly balance these two objectives consistently, year after year.
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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
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Posted on May 13, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
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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.
While Buy Now-Pay Later (BNPL) reduces friction when purchasing, it’s giving some economy watchers unease. As Americans’ budgets buckle under the weight of inflation and higher interest payments, some worry BNPL is more of an invisible burden than a boon, Bloomberg reports. Beware the “phantom debt,” a Wells Fargo economist recently warned, referring to the BNPL industry’s short-term loans, which go largely unaccounted for by those tracking Americans’ debt load. That’s because, unlike credit cards and auto loan providers, Afterpay, Affirm, Klarna, and other BNPL providers don’t usually report transactions to credit scoring agencies.
The Cathie Wood-led Ark Invest just made some significant trades. The most prominent among them were the increased stakes in Palantir Technologies Inc (NYSE: PLTR) and her reduced holdings in Coinbase Global Inc (NASDAQ: COIN).
Dell has recently seen a decline in its revenue. In its most recent earnings report, it revealed that its net revenue shrunk by 11% year-over-year during its fiscal 2024 fourth quarter. For full year 2023, the company’s revenue was down by 14% to $88.4 billion. Partly that was due to a weak personal-computer market and the costs associated with more than 6,000 layoffs. But investors are excited by Dell’s growth potential for its server and computer businesses because of artificial intelligence, the Motley Fool reported.
Posted on May 13, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Women’s health startups are still closing multi million-dollar funding deals despite a challengingventure capital (VC) landscape in which VC dollars are on track to fall by 73% this year compared to last.
For example, in the last year, virtual maternity care program Pomelo Careraised $33 million in seed and Series A rounds led by Andreessen Horowitz; Caraway Health, a digital mental, physical, and reproductive health services platform, raised almost $17 million in a Series A round led by Maveron and GV (formerly Google Ventures); and Intrinsic, which acquires brands that make women’s health products, announced a $15 million equity fund raise (which is when a company raises money by selling its shares).
Posted on May 12, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Fat Brands is the parent company of Fatburger, Johnny Rockets, and a few other restaurant chains. Last year, former CEO Andy Wiederhornstepped down after the Los Angeles Times reported that the federal government was investigating him for fraud. He has since stayed on as the company’s chairman, but on Friday the Justice Department charged him with perpetuating a $47 million fraud against his own shareholders.
In a recent Becker’s Health Care Newsletter, it is reported that a large multi-state hospital system is suing Multiplan for illegal price fixing and automatic significant price reductions, in particular, for out-of-network providers. The story states that Multiplan, by bombarding healthcare providers with automatic reductions in pricing, has made it impossible for providers to deliver healthcare.
National Nurses Week, which ends today on May 12th, Florence Nightingale’s birthday
Rite Aid has announced that 39 stores are set to close their doors for good, this follows the decision to declare Chapter 11 bankruptcy back in October, 2023.
The strategy? Reduce the total number of stores to 1,600 nationwide.
A hedge fund in the United States is generally a limited partnership providing a limited number of qualified investors with access to general partner investment decisions with little restriction in the type of investments or use of leverage. While the flexibility available to a hedge fund from a regulatory standpoint implies a high degree of potential risk, there is a wide range of investment philosophies, strategies, security types and objectives captured under the broad title of hedge fund.
Thus, generalizations regarding the characteristics of hedge funds are even less appropriate than with mutual funds, and evaluation of the investment characteristics and merits of a hedge fund strategy must be on a case-by-case basis. Likewise, the cost structure of a hedge fund often includes a base management fee to the general partner plus a performance-based fee or percentage of the profits, and must be evaluated on a case-by-case basis.
Several different investment vehicles operate under the oversight of varying regulatory bodies which provide access to an investment-managers’ discretionary decisions. While each approach generally represents ownership of an underlying pool of securities, there is usually a great deal of flexibility for the manager to deviate from a specific asset class or investment approach. Also, the fee structure of each vehicle can vary greatly and be quite large once distribution fees and sales charges are taken into account.
Thus, it is important for a medical professional to remember the following:
1. Evaluate the features and costs of an investment vehicle carefully;
2. Consider the cash flows and valuations of the securities that the manager or management approach will focus on as if the investments were being made directly, and above all;
3. Read the prospectus or agreement carefully before making any investment.
Posted on May 12, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
HEDGE FUND
By Staff Reporters
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“I did a lot of math. I made a lot of money, and I gave almost all of it away. That’s the story of my life.”
There are longer versions of the life story of Jim Simons, the legendary mathematician, quantitative investing pioneer, and philanthropist who just died at age 86, but his summary is pretty good.
In 1978, Simons started what would become his wildly successful hedge fund, Renaissance Technologies, where he used his mathematical savvy to deliver a performance that outpaced Warren Buffett and George Soros. Its signature fund averaged 66% annual returns.
With his wife, Marilyn Simons, he also started the Simons Foundation, which gave billions to causes they cared about—including, most recently, the Dublin–New York portals.
Posted on May 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Novavax, the Covid vaccine-maker’s value doubled after it announced a $1.2 billion deal to develop new shots with Sanofi.
And, Mortgage rates fell for the first time since March, to just over 7%.
Here’s where the major stock market benchmarks ended:
The S&P 500 index rose 8.60 points (0.2%) to 5,222.68, up 1.9% for the week; the Dow Jones Industrial Average® ($DJI) advanced 125.08 points (0.3%) to 39,512.84, up 2.2% for the week and its eighth straight daily gain; the NASDAQ Composite® ($COMP) fell 5.40 points (0.03%) to 16,340.87, up 1.1% for the week.
The 10-year Treasury note yield (TNX) increased more than 5 basis points to 4.50%.
The CBOE Volatility Index® (VIX) fell 0.14 to 12.55.
Chip makers ranked among top gainers Friday after Taiwan Semiconductor Manufacturing (TSM) shares surged 4.5% after the company said its April revenue soared 60% behind AI-driven demand. The Philadelphia Semiconductor Index (SOX) climbed 1% and posted a 1.9% gain for the week. Consumer staples and transportation shares were also strong. Energy shares slipped behind a 1.2% drop in WTI Crude Oil (/CL) futures, though oil still ended slightly higher for the week.
National hospital operator Ascension said a “cyber security event” has disrupted some of its clinical operations, according to a news release. Ascension, a St. Louis-based nonprofit and Catholic healthcare network, announced it had detected “unusual activity” on some of its systems. In response, the company kicked off an investigation and remediation efforts—including turning to outside cybersecurity firm Mandiant for help, as well as notifying the “appropriate authorities,” per the release.
Planet Fitness to raise membership price for the first time since 1998. It’s going to take more than $10/month to join a gym once Planet Fitness raises the price of a basic membership for new members to $15 per month this summer. The $10 amount, which has held steady for 26 years, was considered a sweet spot where people were happy to sign up and wouldn’t bother to cancel once they gave up on their fitness goals. But after posting weaker-than-expected Q1 results, the gym chain decided it’s time to change, even though execs acknowledged that customers are looking to save rather than spend.
Posted on May 11, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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DEFINITION: In macro-economics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define “money”, but standard measures usually include currency in circulation (i.e. physical cash) and demand deposits (depositors’ easily accessed assets on the books of financial institutions . The Central Bank [FOMC] of a country may use a definition of what constitutes legal tender for its purposes.
Though there are a few variations of money supply, most economists tend to focus on M1 and M2. The former takes into account cash and coins in circulation, as well as demand deposits in checking accounts and traveler’s checks. In other words, money that’s either in your hand or can be accessed very easily.
Meanwhile, M2 accounts for everything in M1 and adds savings accounts, money market funds, and certificates of deposit (CDs) below $100,000. It’s money you have access to, but it takes a little extra effort to put this capital to work. It’s M2 money supply that’s raising eyebrows on Wall Street and making history.
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What’s of interest is what’s happened to M2 money supply over the trailing year. Following a peak of $21.7 trillion in July 2022, M2 has fallen to a fresh reading of $20.81 trillion, as of May 2023. Although the May reading was higher than April and broke a nine-month downtrend, we’ve still witnessed a 4.1% aggregate drop in M2 from its all-time high.
Considering that M2 enjoyed a historic expansion during the pandemic, it’s certainly possible that a 4.1% decline can be shrugged off as nothing more than money supply reverting back to the mean. But history suggests otherwise.
Though history rarely repeats itself on Wall Street, it often rhymes. We haven’t seen a meaningful year-over-year decline in M2 money supply since the Great Depression in 1933.
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And so, based on what we’re seeing from M2 money supply, commercial bank lending, and domestic banks tightening their lending standards for C&I loans, the ingredients for a U.S. recession are most definitely there. Stock losses have, historically, been most pronounced in the months that follow the official declaration of a recession by the eight-economist panel of the National Bureau of Economic Research.
However, Wall Street’s performance is largely dependent on your investment time frame. If you’re patient, these and other potentially worrisome money metrics represent nothing more than temporary white noise.
Posted on May 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
The S&P 500 index gained 26.41 points (0.5%) to 5,214.08; the Dow Jones Industrial Average rose 331.37 points (0.9%) to 39,387.76; the NASDAQ Composite® ($COMP) advanced 43.51 points (0.3%) to 16,346.26.
The 10-year Treasury note yield (TNX) lost more than 2 basis points to 4.459%.
The CBOE Volatility Index® (VIX) fell 0.31 to 12.69.
Interest-rate-sensitive sectors, such as real estate and utilities, were among the strongest performers Thursday. Energy shares were also strong after WTI Crude Oil (/CL) futures rose for a second straight day after sinking to a two-month low earlier this week. Semiconductor shares were under pressure after disappointing revenue guidance from chip designer Arm Holdings (ARM) sent its shares down 2.3%.
The Dowjumped for the seventh straight day while the S&P 500 closed above 5,200 for the first time in a month as stocks climbed across the board, possibly a reaction to data showing that the cooling labor market could translate into a Federal Reserve interest rate cut in a few months. But, Roblox,tanked 22% yesterday after the company cut its annual bookings forecast. The rough patch suggests that the game’s pandemic-induced popularity has likely peaked.
Last year, Uber boasted its first full-year profit since going public. But yesterday, the company reported a surprise loss for the first quarter of 2024, dashing investors’ hopes for steady profits and sending its stock way down.
Meanwhile, Uber’s smaller rival Lyft appears to have its foot on the gas pedal. It posted better-than-expected quarterly results on Tuesday and saw a stock bump yesterday.
Microsoft plans to put the cash toward creating an AI data center. President Biden was on hand in Wisconsin to help announce the news—and not just to tout a big investment that’s expected to create jobs.
Although some doctors might view a budget as unnecessarily restrictive, sticking to a spending plan can be a useful tool in enhancing the wealth of a practice. And so, I will emphasize keys to smart budgeting and how to track spending and savings in these tough economic times; like today with the stock market busts, venture capitalists invading health care, corona virus the pandemic, aging baby boomer physicians and the great resignation; etc.
There is an aphorism that suggests, “Money cannot buy happiness.” Well, this may be true enough but there is also a corollary that states, “Having a little money can sure reduces the unhappiness.”
Unfortunately, today there is still more than a little financial unhappiness in all medical specialties. The challenges range from the commoditization of medicine, aging demographics, Medicare reimbursement cutbacks, ACA, and increased competition to floundering equity markets, the squeeze on credit and declines in the value of a practice. Few doctors seem immune to this “perfect storm” of economic woes. And then Covid-19, corona, and covid.
Far too many physicians are hurting and it is not limited to above-average earning professionals. However, one can strive to reduce the pain by following some basic budgeting principles. By adhering to these principles, physicians can eliminate the “too many days at the end of the month” syndrome and instead develop a foundation for building real wealth and security, even in difficult economic climates like we face today.
There are three major budget types. A flexible budget is an expenditure cap that adjusts for changes in the volume of expense items. A fixed budget does not. Advancing to the next level of rigor, a zero-based budget starts with essential expenses and adds items until the money is gone. Regardless of type, budgets can be extremely effective if one uses them at home or the office in order to spot money troubles before they develop.
For the purpose of wealth building, doctors may think of this budget as a quantitative expression of an action plan. It is an integral part of the overall cost-control process for the individual, his or her family unit or one’s medical practice.1
How To Prepare A Personal Cash Flow Budget
Preparing a net income statement (lifestyle cash flow budget) is often difficult because many doctors perceive it as punitive. Most doctors do not live a disciplined spending lifestyle and they view a budget as a compromise to it. However, a cash flow budget is designed to provide comfort when there is surplus income that can be diverted for other future needs. For example, if you treat retirement savings as just another periodic bill, you are more likely to save for it.
You may construct a personal cash budget by recording each cash receipt and cash disbursement on a spreadsheet. Only the date, amount and a brief description of the transaction are necessary. The cash budget is a simple tool that even doctors who lack accounting acumen can use. Since it is possible to track the cash-in and cash-out in the same format used for a standard check register, most doctors find that the process takes very little time. Such a budget will provide a helpful look at how well you are staying within available resources for a given period.
We then continue with an analysis of your operating checkbook and a review of various source documents such as one’s tax return, credit card statements, pay stubs and insurance policies. A typical statement will show all cash transactions that occur within one year. It is helpful to establish a monthly equivalent to all items of income and expense. For the purposes of getting started, note items of income and expense by the frequency you are accustomed to receiving or spending them.
What You Should Know About The ‘Action Plan’ Cash Budget
For a medial office, the first operations budget item might be salary for the doctor and staff. Operating assets and other big ticket items come next. Some doctors/clients review their office P&L statements monthly, line by line, in an effort to reduce expenses. Then they add back those discretionary business expenses they have some control over.
Now, do you still run out of money before the end of the month? If so, you had better cut back on entertainment, eating dinner out or that fancy, new but unproven piece of medical equipment. This sounds draconian until you remind yourself that your choice is either: live frugally later or live a simpler lifestyle now and invest the difference.
As a young doctor, it may be a difficult trade-off. By mid-life, however, you are staring retirement in the face. That is why the action plan depends on your actions concerning monetary scarcity, a plan that one can implement and measure using simple benchmarks or budgeting ratios. By using these statistics, perhaps on an annual basis, the podiatrist can spot problems, correct them and continue planning actively toward stated goals like building long-term wealth.2
Useful Calculations To Assess Your Budgeting Success
In the past, generic budgeting ratios would emphasize not spending more than 15 to 20 percent of your net salary on food or 8 percent on medical care. Now these estimates have given way to more rigorous numbers. Personal budget ratios, much like medical practice financial ratios, represent comparable benchmarks for parameters such as debt, income growth and net worth. Although these ratios are still broad, the following represent some useful personal budgeting ratios for physicians.
• Basic liquidity ratio = liquid assets / average monthly expenses. Cash-on-hand should approach 12 to 24 months or more in the case of a doctor employed by a financially insecure HMO or fragile medical group practice. Yes, chances are you have heard of the standard notion of setting enough cash aside to cover three months in a rainy day scenario. However, we have decried this older laymen standard for many years in our textbooks, white papers and speaking engagements as being wholly insufficient for the competitively unstable environment of modern healthcare.
• Debt to assets ratio = total debt / total assets. This percentage is high initially but should decrease with age as the doctor approaches a debt-free existence
• Debt to gross income ratio = annual debt repayments / annual gross income. This represents the adequacy of current income for existing debt repayments. Doctors should try to keep this below 20 to 25 percent.
• Debt service ratio = annual debt repayment / annual take-home pay. Physicians should aim to keep this ratio below 25 to 30 percent or face difficulty paying down debt.
• Investment assets to net worth ratio = investment assets / net worth. This budget ratio should increase over time as retirement approaches.
• Savings to income ratio = savings / annual income. This ratio should also increase over time as one retires major obligations like medical school debt, a practice loan or a home mortgage.
• Real growth ratio = (income this year – income last year) / (income last year – inflation rate). This budget ratio should grow faster than the core rate of inflation.
• Growth of net worth ratio = (net worth this year – net worth last year) / net worth last year – inflation rate). Again, this budgeting ratio should stay ahead of the specter of rising inflation.
In other words, these ratios will help answer the question: “How am I doing?”
Pearls For Sticking To A Budget
Far from the burden that most doctors consider it to be, budgeting in one form or another is probably one of the greatest tools for building wealth. However, it is also one of the greatest weaknesses among physicians who tend to live a certain lifestyle.3
In fact, I have found that less than one in 10 medical professionals have a personal budget. Fear, or a lack of knowledge, is a major cause of procrastination. Fortunately, the following guidelines assist in reversing this microeconomic disaster.
1. Set reasonable goals and estimate annual income. Do not keep large amounts of cash at home or office. Deposit it in an FDIC insured money-market account for safety. Do not deposit it in a money market mutual fund with net asset value (NAV) that may “break the buck” and fall below the one-dollar level. The new limit is $250,000. Track actual bills and expenses.
2. Do not pay bills early, do not have more taxes withheld from your salary than needed and develop spending estimates to pay fixed expenses first. Fixed expenses are usually contractual and usually include housing, utilities, food, Social Security, medical, debt repayments, homeowner’s or renter’s insurance, auto, life and disability insurance, etc. Reduce fixed expenses when possible. Ultimately, all expenses get paid and become variable in the long run.
3. Make it a priority to reduce variable expenses. Variable expenses are not contractual and may include clothing, education, recreational, travel, vacation, gas, cable TV, entertainment, gifts, furnishings, savings, investments, etc. Trim variable expenses by 5 to 20 percent.
4. Use “carve-outs or “set-asides” for big ticket items and differentiate true wants from frivolous needs.
5. Calculate both income and expenses as a percentage of your total budget. Determine if there is a better way to allocate resources. Review the budget on a monthly basis to notice any variance. Determine if the variance was avoidable, unavoidable or a result of inaccurate assumptions. Take corrective action as needed.
6. Know the difference between saving and investing. Savers tend to be risk adverse while investors understand risk and take steps to mitigate it. Watch mutual fund commissions and investment advisory fees, which cut into return-rates. Keep investments simple and diversified (stocks, bonds, cash, index, no-load mutual and exchange traded funds, etc.).4
How To Budget In The Midst Of A [Corona] Crisis
Sooner or later, despite the best of budgeting intentions, something will go awry. A doctor will be terminated or may be the victim of a reduction-in-force (RIF) because of cost containment initiatives of the corona pandemic. A medical practice partnership may dissolve or a local hospital or surgery center may close, hurting your practice and livelihood. Someone may file a malpractice lawsuit against you, a working spouse may be laid off or you may get divorced. Regardless of the cause, budgeting crisis management encompasses two different perspectives: awareness and execution.
First, if you become aware that you may lose your job, the following proactive steps will be helpful to your budget and overall financial condition.
• Decrease retirement contributions to the required minimum for company/practice match. • Place retirement contribution differences in an after-tax emergency fund. • Eliminate unnecessary payroll deductions and deposit the difference to cash. • Replace group term life insurance with personal term or universal life insurance. • Take your old group term life insurance policy with you if possible. • Establish a home equity line of credit to verify employment. • Borrow against your pension plan only as a last resort.
If you have lost your job or your salary has been depressed, negotiate your departure and get an attorney if you believe you lost your position through breach of contract or discrimination. Then execute the following steps to recalculate your budget and boost your wealth rebuilding activities.
• Prioritize fixed monthly bills in the following order: rent or mortgage; car payments; utility bills; minimum credit card payments; and restructured long-term debt.
• Consider liquidating assets to pay off debts in this order: emergency fund, checking accounts, investment accounts or assets held in your children’s names.
• Review insurance coverage and increase deductibles on homeowner’s and automobile insurance for needed cash.
• Then sell appreciated stocks or mutual funds; personal valuables such as furnishings, jewelry and real estate; and finally, assets not in pension or annuities if necessary.
• Keep or rollover any lump sum pension or savings plan distribution directly to a similar savings plan at your new employer, if possible, when you get rehired.
• Apply for unemployment insurance.
• Review your medical insurance and COBRA coverage after a “qualifying event” such as job loss, firing or even after quitting. It is a bit expensive due to a 2 percent administrative fee surcharge but this may be well worth it for those with preexisting conditions or who are otherwise difficult to insure. One may continue COBRA for up to 18 months.
• Consider a high deductible Health Savings Account (HSA), which allows tax-deferred dollars like a medical IRA, for a variety of costs not normally covered under traditional heath insurance plans. Self-employed doctors deduct both the cost of the premiums and the amount contributed to the HSA. Unused funds roll over until the age of 59½, when one can use the money as a supplemental retirement benefit.
• Eliminate unnecessary variable, charitable and/or discretionary expenses, and become very frugal.
Final Notes
The behavioral psychologist, Gene Schmuckler, PhD, MBA, sometimes asks exasperated doctors to recall the story of the old man who spent a day watching his physician son treating HMO patients in the office. The doctor had been working at his usual feverish pace all morning. Although he was working hard, he bitterly complained to his dad that he was not making as much money as he used to make. Finally, the old man interrupted him and said, “Son, why don’t you just treat the sick patients?” The doctor-son looked at his father with an annoyed expression and responded, “Dad, can’t you see, I do not have time to treat just the sick ones.”5
Always remember to add a bit of emotional sanity into your budgeting and economic endeavors.6
Regardless of one’s age or lifestyle, the insightful doctor realizes that it is never too late to take control of a lost financial destiny through prudent wealth building activities. Personal and practice budgeting is always a good way to start the journey.7
The Author:
Dr. Marcinko is a former university endowed chairman and professor, former certified financial planner and has been a medical management advisor for more than two decades. He is the CEO of www.MedicalBusinessAdvisors.com, a health economics and business finance consulting firm.
References:
1. Marcinko DE (Ed). The Business of Medical Practice (Advanced Profit Maximizing Techniques for Savvy Doctors). Springer Publishers, New York, NY, 2000 and 2004 2. Marcinko DE (Ed). Financial Planning for Physicians and Advisors, Jones and Bartlett Publishers, Sudbury, MA, 2005 3. Marcinko DE (Ed). Risk Management and Insurance Panning for Physicians and Advisors, Jones and Bartlett Publishers, Sudbury, MA, 2006. 4. Marcinko DE, Hetico HR. The Dictionary of Health Insurance and Managed Care. Springer Publishing, New York, 2007. 5. Marcinko DE, Hetico HR. The Dictionary of Health Economics and Finance. Springer Publishing, New York, 2008. 6. Marcinko DE, Hetico HR. Healthcare Organizations (Financial Management Strategies). Standard Technical Publishers, Blaine, WA, 2009. Additional Reference 7. Schmuckler E. Bridging Financial Planning and Human and Human Psychology. In, Marcinko DE (Ed): Financial Planning for Physicians and Healthcare Professionals. Aspen Publications, New York, NY, 2001, 2002 and 2003.
Posted on May 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
It’s the first anniversary of the Medicaid unwinding for many states, a process that kicked off when federal rules that had kept people on Medicaid and the Children’s Health Insurance Program (CHIP) through the pandemic expired. And while states could redetermine eligibility again, things have “unwound” more than some experts predicted. Children were kicked off the rolls at higher rates than adults, according to a new study the Urban Institute released May 2. Twelve states—Montana, Iowa, South Dakota, Alabama, Idaho, Georgia, Texas, Arkansas, Oklahoma, Florida, Mississippi, Colorado—exceeded 100% of their total projections for disenrolling children.
The S&P 500® index (SPX) was little changed at 5,187.67; the Dow Jones Industrial Average gained 172.13 points (0.4%) to 39,056.39; the NASDAQ Composite® ($COMP) declined 29.80 points (0.2%) to 16,302.76.
The 10-year Treasury note yield (TNX) rose more than 3 basis points to 4.496%.
The CBOE Volatility Index® (VIX) fell 0.23 to 13.00.
Retail and real estate shares were among the weakest areas Wednesday, while banks and utilities were firm. Utility shares extended a nearly month-long rally, which may in part reflect greater expectations for Fed rate cuts. Lower interest rates can make utility shares with high dividend yields relative to Treasuries more appealing. The Dow Jones Utility Average ($DJU) rose 0.5% to end at its highest level since late July and is up 12% from a mid-April low.
And, Shopify’s value plunged by nearly $20 billion after the online payments company released a gloomy forecast for this quarter. It’s the latest pandemic darling to stumble: According to the Financial Times, the firms that skyrocketed during lockdowns have lost a collective $1.5 trillion in value since the end of 2020.
Steward Health Care System, the largest U.S. physician-owned hospital operator, is expected to file for chapter 11 bankruptcy as soon as Sunday, according to a WSJ report, which cited people familiar with the matter. Steward Health Care is the largest tenant of Medical Properties Trust (NYSE: MPW). Steward Health Care hired restructuring advisers to improve its liquidity and restore its balance sheet in January 2024.
DEFINITION: Mental accounting attempts to describe the process whereby people code, categorize and evaluate economic outcomes. The concept was first named by Richard Thaler. Mental accounting deals with the budgeting and categorization of expenditures. People budget money into mental accounts for expenses or expense categories
Mental Accounting is the act of bucketizing investments and then reviewing the performance of the individual buckets separately (e.g. investing at low savings rate while paying high credit card interest rates).
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Examples of mental accounting are: (1) matching costs to benefits (wanting to pay for vacation before taking it and getting paid for work after it was done, even though from perspective of time value of money the opposite should be preferred0, (2) aversion to debt (don’t like long-term debt for short-term benefit), (3) sunk-cost effect (illogically considering non-recoverable costs when making forward-going decisions).
In investing, treating buckets separately and ignoring interaction (correlations) induces people not to sell losers (even though they get tax benefits), prevent them from investing in the stock market because it is too risky in isolation (however much less so when looked at as part of the complete portfolio including other asset classes and labor income and occupied real estate), thus they “do not maximize the return for a given level of risk taken).
Posted on May 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Here’s where the major stock market benchmarks ended:
The S&P 500 index rose 6.96 points (0.1%) to 5,187.70; the Dow Jones Industrial Average gained 31.99 points (0.1%) to 38,884.26; the NASDAQ Composite® ($COMP) eased 16.70 points (0.1%) to 16,332.56.
The 10-year Treasury note yield dropped more than 3 basis points to 4.457%.
The CBOE Volatility Index® (VIX) fell 0.26 to 13.23.
Interest-rate-sensitive sectors, such as real estate and utilities, were among the market’s strongest performers Tuesday. The Philadelphia Utility Index (UTY) rose 1.3%, its fifth straight daily gain, and hit its highest level in almost a year. The recent strength may in part reflect heightened expectations for lower interest rates, which may make utility shares with relatively high dividend yields compared to Treasuries more appealing. The utilities sector is also coming off a strong April, during which it was the only S&P 500 sector with a positive return, with chart patterns suggesting a bullish long-term momentum shift.
The semiconductor sector was among the weakest sectors Tuesday, partly behind a 1.7% drop in Nvidia (NVDA). The shares fell after billionaire investor Stanley Druckenmiller told CNBC he reduced his stake in the chipmaker in late March, saying that artificial intelligence may be a “little overhyped” for the short term.
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Peloton is reportedly being circled by private equity firms for a potential buyout of the enfeebled fitness company.
The SEC is preparing to sue over Robinhood’s crypto business. Robinhood just revealed that it’s been notified that the SEC plans to bring an enforcement action against its crypto unit for alleged securities violations. But the online brokerage said it’s not sweating: “We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law,” Dan Gallagher, Robinhood’s chief legal, compliance, and corporate affairs officer, wrote in a blog post. Such a notice doesn’t always mean a suit will follow, but crypto companies and the agency have been sparring for years over whether crypto tokens count as securities.
The Biden administration were quick to praise a new report that extends the lifespan of the Hospital Insurance Trust Fund, but the report renewed calls for increasing physician payments.
Amwell, a telehealth company, continues to struggle in the stock market, and both its bottom- and top-line results in the first quarter missed Street analysts’ estimates.
And … between the Change Healthcare cyberattack and Medicare Advantage headwinds, major insurers faced unique challenges in the first quarter.
Stat: 8.7%. That’s the level to which US consumers can expect the 30-year mortgage rate to rise over the next year, which marks a series high, according to a New York Federal Reserve survey (MarketWatch)
Posted on May 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Low-income communities often struggle to access healthcare services, but a new analysis of federally qualified health centers (FQHCs)—which provide quality care to patients regardless of ability to pay—has helped nail down one reason. When it comes to screening for certain cancers, these nonprofit community health centers have fallen far behind the national average, according to a study led by cancer center researchers at the University of Texas MD Anderson and the University of New Mexico.
Healthcare bankruptciessurged in 2023, and it turns out many of the companies that went under had one thing in common: private equity (PE) ownership. At least 21% of the 80 healthcare companies that filed for bankruptcy last year were PE-owned, according to a report from the nonprofit Private Equity Stakeholder Project (PESP).
Warren Buffett oncontemplated his own mortality at Berkshire’s meeting.Succession was the topic du jour at the Berkshire Hathaway shareholder meeting in Omaha last week. After his longtime business partner Charlie Munger died last year at 99, CEO Warren Buffett—who turns 94 in August—revealed his heir apparent, Greg Abel, will have the final say on investment decisions in his absence. Buffett ended his Q&A portion with the quip, “I not only hope you come next year. I hope I come next year.” Adding to the ominous vibes, Buffett said AI is a genie that “scares the hell out of me.”
The S&P 500 index climbed 52.95 points (1.0%) to 5,180.74; the Dow Jones Industrial Average gained 176.59 points (0.5%) to 38,852.27; the NASDAQ Composite advanced 192.92 points (1.2%) to 16,349.25.
The 10-year Treasury note yield (TNX) fell about 1 basis point to 4.491%.
The CBOE Volatility Index® (VIX) was little changed at 13.48.
Semiconductors were among the strongest performers Monday behind Micron Technology (MU), whose shares rallied 4.7% after Robert W. Baird upgraded the chipmaker to “outperform” from “neutral.” Micron Technology was the top gainer in the Philadelphia Semiconductor Index (SOX), which advanced 2.2% to near a four-week high.
Small-cap stocks also got out of the gate strong this week. The Russell 2000® Index (RUT) gained 1.2% to end at a four-week high but is still up just 1.7% for the year, while the S&P 500 has gained 8.6%.
Financial benchmarking can assist healthcare managers and professional financial advisors in understanding the operational and financial status of their organization or practice.
The general process of financial benchmarking analysis may include three elements: (1) Historical subject benchmarking; (2) Benchmarking to industry norms; and, (3) Financial ratio analysis.
History
Historical subject benchmarking compares a healthcare organization’s most recent performance with its reported performance in the past in order to: examine performance over time; identify changes in performance within the organization (e.g., extraordinary and non-recurring events); and, to predict future performance.
As a form of internal benchmarking, historical subject benchmarking avoids issues such as: differences in data collection and use of measurement tools; and, benchmarking metrics that often cause problems in comparing two different organizations.
However, it is necessary to common size data in order to account for company differences over time that may skew results.
Benchmarking
Benchmarking to industry norms, analogous to Fong and colleagues’ concept of industry benchmarking, involves comparing internal company-specific data to survey data from other organizations within the same industry. This method of benchmarking provides the basis for comparing the subject entity to similar entities, with the purpose of identifying its relative strengths, weaknesses, and related measures of risk.
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Financial Ratio Analysis
The process of benchmarking against industry averages or norms will typically involve the following steps:
Identification and selection of appropriate surveys to use as a benchmark, i.e., to compare with data from the organization of interest. This involves answering the question, “In which survey would this organization most likely be included?”;
If appropriate, re-categorization and adjustment of the organization’s revenue and expense accounts to optimize data compatibility with the selected survey’s structure and definitions (e.g., common sizing); and,
Calculation and articulation of observed differences of organization from the industry averages and norms, expressed either in terms of variance in ratio, dollar unit amounts, or percentages of variation.
Trends
Financial ratio analysis typically involves the calculation of ratios that are financial and operational measures representative of the financial status of an enterprise. These ratios are evaluated in terms of their relative comparison to generally established industry norms, which may be expressed as positive or negative trends for that industry sector. The ratios selected may function as several different measures of operating performance or financial condition of the subject entity.
The Selected Ratios
Common types of financial indicators that are measured by ratio analysis include:
Liquidity. Liquidity ratios measure the ability of an organization to meet cash obligations as they become due, i.e., to support operational goals. Ratios above the industry mean generally indicate that the organization is in an advantageous position to better support immediate goals. The current ratio, which quantifies the relationship between assets and liabilities, is an indicator of an organization’s ability to meet short-term obligations. Managers use this measure to determine how quickly assets are converted into cash.
Activity. Activity ratios, also called efficiency ratios, indicate how efficiently the organization utilizes its resources or assets, including cash, accounts receivable, salaries, inventory, property, plant, and equipment. Lower ratios may indicate an inefficient use of those assets.
Leverage.Leverage ratios, measured as the ratio of long-term debt to net fixed assets, are used to illustrate the proportion of funds, or capital, provided by shareholders (owners) and creditors to aid analysts in assessing the appropriateness of an organization’s current level of debt. When this ratio falls equal to or below the industry norm, the organization is typically not considered to be at significant risk.
Profitability. Indicates the overall net effect of managerial efficiency of the enterprise. To determine the profitability of the enterprise for benchmarking purposes, the analyst should first review and make adjustments to the owner(s) compensation, if appropriate. Adjustments for the market value of the “replacement cost” of the professional services provided by the owner are particularly important in the valuation of professional medical practices for the purpose of arriving at an ”economic level” of profit.
Data Homogeneity
The selection of financial ratios for analysis and comparison to the organization’s performance requires careful attention to the homogeneity of data. Benchmarking of intra-organizational data (i.e., internal benchmarking) typically proves to be less variable across several different measurement periods.
However, the use of data from external facilities for comparison may introduce variation in measurement methodology and procedure. In the latter case, use of a standard chart of accounts for the organization or recasting the organization’s data to a standard format can effectively facilitate an appropriate comparison of the organization’s operating performance and financial status data to survey results.
Operational benchmarking is used to target non-central work or business processes for improvement. It is conceptually similar to both process and performance benchmarking, but is generally classified by the application of the results, as opposed to what is being compared. Operational benchmarking studies tend to be smaller in scope than other types of benchmarking, but, like many other types of benchmarking, are limited by the degree to which the definitions and performance measures used by comparing entities differ. Common sizing is a technique used to reduce the variations in measures caused by differences (e.g., definition issues) between the organizations or processes being compared.
Common Sizing
Common sizing is a technique used to alter financial operating data prior to certain types of benchmarking analysis and may be useful for any type of benchmarking that requires the comparison of entities that differ on some level (e.g., scope of respective benchmarking measurements, definitions, business processes). This is done by expressing the data for differing entities in relative (i.e., comparable) terms.
Example:
For example, common sizing is often used to compare financial statements of the same company over different periods of time (e.g., historical subject benchmarking), or of several companies of differing sizes (e.g., benchmarking to industry norms). The latter type may be used for benchmarking an organization to another in its industry, to industry averages, or to the best performing agency in its industry. Some examples of common size measures utilized in healthcare include:
Percent of revenue or per unit produced, e.g., relative value unit (RVU);
Per provider, e.g., physician;
Per capacity measurement, e.g., per square foot; or,
Other standard units of comparison.
Assessment
As with any data, differences in how data is collected, stored, and analyzed over time or between different organizations may complicate the use of it at a later time. Accordingly, appropriate adjustments must be made to account for such differences and provide an accurate and reliable dataset for benchmarking.
Conclusion
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The investment profession has come a long way since the door-to-door stock salesmen of the 1920s sold a willing public on worthless stock certificates. The stock market crash of 1929 and ensuing Great Depression of the 1930s forever changed the way investment operations are run. A bewildering array of laws and regulations sprung up, all geared to protecting the individual investor from fraud. These laws also set out specific guidelines on what types of investment can be marketed to the general public – and allowed for the creation of a set of investment products specifically not marketed to the general public. These early-mid 20th century lawmakers specifically exempted from the definition of “general public,” for all practical purposes, those investors that meet certain minimum net worth guidelines.
The lawmakers decided that wealth brings the sophistication required to evaluate, either independently or together with wise counsel, investment options that fall outside the mainstream. Not surprisingly, an investment industry catering to such wealthy individuals, such as doctors and healthcare professionals, and qualifying institutions has sprung up.
EARLY DAYS
The original hedge fund was an investment partnership started by A.W. Jones in 1949. A financial writer prior to starting his investment management career, Mr. Jones is widely credited as being the prototypical hedge fund manager. His style of investment in fact gave the hedge fund its name – although Mr. Jones himself called his fund a “hedged fund.” Mr. Jones attempted to “hedge,” or protect, his investment partnership against market swings by selling short overvalued securities while at the same time buying undervalued securities. Leverage was an integral part of the strategy. Other managers followed in Mr. Jones’ footsteps, and the hedge fund industry was born.
In those early days, the hedge fund industry was defined by the types of investment operations undertaken – selling short securities, making liberal use of leverage, engaging in arbitrage and otherwise attempting to limit one’s exposure to market swings. Today, the hedge fund industry is defined more by the structure of the investment fund and the type of manager compensation employed.
The changing definition is largely a sign of the times. In 1949, the United States was in a unique state. With the memory of Great Depression still massively influencing common wisdom on stocks, the post-war euphoria sparked an interest in the securities markets not seen in several decades. Perhaps it is not so surprising that at such a time a particularly reflective financial writer such as A.W. Jones would start an investment operation featuring most prominently the protection against market swings rather than participation in them.
Apart from a few significant hiccups – 1972-73, 1987 and 2006-07 being most prominent – the U.S. stock markets have been on quite a roll for quite a long time now. So today, hedge funds come in all flavors – many not hedged at all. Instead, the concept of a private investment fund structured as a partnership, with performance incentive compensation for the manager, has come to dominate the mindscape when hedge funds are discussed. Hence, we now have a term in “hedge fund” that is not always accurate in its description of the underlying activity. In fact, several recent events have contributed to an even more distorted general understanding of hedge funds.
During 1998, the high profile Long Term Capital Management crisis and the spectacular currency losses experienced by the George Soros organization both contributed to a drastic reversal of fortune in the court of public opinion for hedge funds. Most hedge fund managers, who spend much of their time attempting to limit risk in one way or another, were appalled at the manner with which the press used the highest profile cases to vilify the industry as dangerous risk-takers. At one point during late 1998, hedge funds were even blamed in the lay press for the currency collapses of several developing nations; whether this was even possible got short thrift in the press.
Needless to say, more than a few managers have decided they did not much appreciate being painted with the same “hedge fund” brush. Alternative investment fund, private investment fund, and several other terms have been promoted but inadequately adopted. As the memory of 1998 and 2007 fades, “hedge fund” may once again become a term embraced by all private investment managers.
Photo by Alexander Mils
ASSESSMENT: Physicians, and all investors, should be aware, however, that several different terms defining the same basic structure might be used. Investors should therefore become familiar with the structure of such funds, independent of the label. The Securities Exchange Commission calls such funds “privately offered investment companies” and the Internal Revenue Service calls them “securities partnerships.”
Posted on May 6, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
A cooling labor market raises hopes for a rate cut in the summer. The latest Labor Department data shows the US added 175,000 jobs in April, but much less than the 300,000 added in March and also less than economists expected. Meanwhile, the unemployment rate ticked up to 3.9% from 3.8% in March, and wages rose less than anticipated. All that bad news for us was music to the ears of investors who are holding out hope that the Federal Reserve might still cut interest rates this summer despite most recent economic data showing that inflation is sticking around.
Rate cuts appear to be back on the 2024 menu following Friday’s softer-than-expected jobs report, fueling gains for all three major stock indexes last week. With the report calming worries that inflation is ticking back up, investors now project a 50% likelihood that the Federal Reserve will reduce rates in September.
Coinbase is benefiting from the hype around new bitcoin ETFs. The crypto exchange reported a $1.2 billion quarterly profit last week, and net revenue rose by 115%.
The Zeta Model is a mathematical model that estimates the chances of a public company going bankrupt within a two-year time period. The number produced by the model is referred to as the company’s Z-score (or zeta score) and is considered to be a reasonably accurate predictor of future bankruptcy.
The model was published in 1968 by New York University professor of finance Edward I. Altman. The resulting Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company.
Posted on May 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Starbucks – The coffee company known for consistently outperforming itself reported less-than-spectacular earnings this week, sending its stock plunging 12% on Tuesday evening last week on the news—nearly as much as when the company shut all its doors during Covid 19. For the first time since 2020, US same-store sales declined, falling 3% alongside a 7% decrease in foot traffic. Meanwhile, revenue fell 1.8% to $8.56 billion as sales in China—the chain’s second-biggest market—declined 11%, and Starbucks lowered its sales outlook for the year.
Educators have long pushed back against distraction machines (aka phones), with 77% of schools banning them in the classroom as of 2020, according to a National Center for Education Statistics survey. School time still overlaps with screen time: 97% of students are on their phones during school hours, according to a study by Common Sense Media, a nonprofit that informs parents about technology. While much of students’ phone use might be at lunch or recess, teachers complain that kids aren’t waiting for the bell to take a discreet peek at their screens.
Creatine may counteract sleep deprivation. The dietary supplement all over your Instagram feed might one day help workers who have to do a lot on small amounts of sleep, like ER staff, first responders, and anyone sharing a house with a baby.
Posted on May 4, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
The S&P 500 index rose 63.59 points (1.3%) to 5,127.79, up 0.6% for the week; the Dow Jones Industrial Average® ($DJI) gained 450.02 points (1.2%) to 38,675.68, up 1.1% for the week; the NASDAQ Composite surged 315.37 points (2.0%) to 16,156.33, up 1.4% for the week.
The 10-year Treasury note yield (TNX) fell about 7 basis points to 4.50%, down about 16 basis points for the week.
The CBOE Volatility Index® (VIX) fell 1.19 to 13.49.
Technology shares were among the strongest performers Friday behind a 6% rally in shares of Apple (AAPL), which late Thursday reported stronger-than-expected quarterly results and said it will repurchase $110 billion in shares. Amgen (AMGN) soared nearly 12%, leading Dow gainers after the biotechnology company beat earnings expectations.
In other markets, WTI Crude Oil futures (/CL) extended a week-long slump to end just above $78 per barrel, the lowest since mid-March. Crude futures dropped almost 7% this week, partly reflecting rising U.S. supplies and signs of slower fuel demand.
Posted on May 3, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Job growth slowed and unemployment ticked higher last month, marking a break from a string of data showing surprising strength in the labor market.
U.S. employers added a seasonally adjusted 175,00 jobs in April, the Labor Department reported on Friday. That was far less than in March, when gains exceeded 300,000, and also below what economists had expected. The unemployment rate ticked up to 3.9% from March’s 3.8%.
According to the WSJ, wages also rose less than anticipated, increasing 3.9% from a year earlier after rising 4.1% in March.
Friday’s report today is sure to stir immediate debate among economists and investors about whether the labor market is merely cooling in a welcome fashion or starting to show more serious strains under the pressure of higher interest rates.
Treasury yields, which largely reflect investors’ expectations for short-term rates set by the Federal Reserve, fell after the report. The yield on the benchmark 10-year U.S. Treasury note was 4.471% in recent trading, according to Tradeweb, down from 4.569% Thursday.
Stock futures climbed, suggesting investors were pleased with the data, which could increase optimism about the outlook for inflation.
Posted on May 3, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Yesterday, sales of Wegovy more than doubled last quarter, and at least 25,000 people are starting to take it in the US per week. It also posted a $3.65 billion net profit and increased its sales outlook for 2024. But its stock Novo Nordisk still dropped yesterday.
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iPhone sales are down but Apple share buybacks are up. Apple managed to keep investors happy, sending its stock shooting up after-hours yesterday, despite selling fewer iPhones last quarter. Sales of the signature phone dipped 10% year over year, and revenue fell 4.3% to $90.8 billion. But Apple also announced $110 billion in share buybacks, the largest in the company’s history, per CNBC. And sales in China, which has been a sore spot, came in at $16.4 billion, less than a year earlier but more than analysts had predicted.
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Stocks rose yesterday as investors digested Jerome Powell’s recent comments and decided they only had to fear fear itself—and not interest rate hikes. Investors changed into the fast lane to buy Carvana after the used car sales site reported its best earnings ever Wednesday evening.
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Stat: 16%. That’s the percentage by which CVS stocks plummeted Wednesday after the company reported earnings below expectations and cut its annual outlook, according to (CNBC).
But – Here’s where the major stock market benchmarks ended Thursday:
The S&P 500® index (SPX) rose 45.81 points (0.9%) to 5,064.20; the Dow Jones Industrial Average® ($DJI) added 322.37 points (0.9%) to 38,225.66; the NASDAQ Composite® ($COMP) surged 235.48 points (1.5%) to 15,840.96.
The 10-year Treasury note yield (TNX) dropped about 1 basis point to 4.583%.
The CBOE Volatility Index® (VIX) fell 0.71 to 14.68.
Transportation shares helped lead the market higher after C.H. Robinson (CHRW) reported stronger-than-expected quarterly results, sending the freight logistics and trucking company’s stock up 12%. The Dow Jones Transportation Average ($DJT) jumped 2.5%. Semiconductors were also strong after Qualcomm (QCOM) advanced 9.7% in the wake of the chip maker’s better-than-expected earnings.
Apple (AAPL) shares advanced 2.2% ahead of the company’s quarterly earnings report scheduled after Thursday’s close.
In other markets, WTI Crude Oil (/CL) futures bounced back to end with a slight gain after earlier dropping to a seven-week low under $78.50 per barrel.
Posted on May 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Here’s where the major stock market benchmarks ended:
The S&P 500® index (SPX) fell 17.30 points (0.3%) to 5,018.39; the Dow Jones Industrial Average® ($DJI) gained 87.37 points (0.2%) to 37,903.29; the NASDAQ Composite® ($COMP) lost 52.34 points (0.3%) to 15,605.48.
The 10-year Treasury note yield (TNX) dropped more than 5 basis points to 4.63%.
The CBOE Volatility Index® (VIX) decreased 0.28 to 15.37.
Banks and other financial shares led the market’s afternoon upswing, reflecting renewed optimism over the outlook for interest rates. The KBW Regional Bank Index (KRX) jumped 2.4% and posted its first gain in five days. Biotechnology and communication services were also strong.
Energy shares were among the weakest performers as WTI Crude Oil (/CL) futures extended a week-long nosedive and dropped under $80 per barrel for the first time since mid-March. Crude futures sank over 3% after the Energy Information Administration reported U.S. oil inventories surged 1.6% last week.
Among top companies, Amazon (AMZN) gained 2.2% after reporting stronger-than-expected earnings and revenue late Tuesday. Starbucks (SBUX) tumbled 16% following unexpectedly soft quarterly results. Apple (AAPL) eased 0.6% ahead of its quarterly results, expected after Thursday’s close.
Speaking of stock companies, however big you think UnitedHealth is, it’s bigger than that. For example:
With a market cap of nearly $450 billion, it’s the fourth-largest company in the US by revenue this year, beating out Alphabet and Microsoft.
The company is eyeing a $24.7 billion profit in 2024.
One analyst estimated that more than 5% of US GDP flows through UnitedHealth’s systems daily.
And so, lawmakers in Washington are prepared to grill UnitedHealth CEO Andrew Witty in two congressional hearings today, months after a cyberattack on a subsidiary of the healthcare giant, Change Healthcare, rattled the industry and left pharmacies, doctors, and hospitals in the dark. Change processes roughly half of all Americans’ medical claims. Congress wants Witty to clarify how UnitedHealth handled the breach of patient data. But beyond that, it wants to investigate whether the company—the nation’s largest private health insurer—has grown too big and taken on too much risk.
Retailer Walmart announced plans Tuesday to shutter its network of 51 health clinics in five states, along with its telehealth business. The impending closures signify that Walmart is scuttling its initial plans to expand the services, citing escalating operation costs and “challenging reimbursement environment,” the company said in a news release.
Finally – Happy Women’s Health Month! Women and people assigned female at birth are disproportionately affected by a range of health conditions, including autoimmune diseases, chronic pain, and dementia. The month of May is intended to raise awareness of these disparities and educate women on steps they can take to improve their health, such as getting annual breast exams. For all our woman-identifying readers, take some time to prioritize your health this month!
Posted on May 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Health Capital Consultants, LLC
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On February 27, 2024, the Wall Street Journal (WSJ) reported that the Department of Justice (DOJ) has launched an antitrust investigation into UnitedHealth Group (UHG), the owner of the biggest health insurer in the U.S. and the leading manager of drug benefits and one of the largest networks of physician groups. This investigation comes as the Biden administration’s antitrust enforcers have ramped up investigations into some of the biggest U.S. companies, including Amazon, Apple, and Google.
Posted on May 1, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
May Day is a European festival of ancient origins marking the beginning of summer, usually celebrated on 1 May, around halfway between the Northern Hemisphere’s Spring equinox and June solstice. Festivities may also be held the night before, known as May Eve. Traditions often include gathering wildflowers and green branches, weaving floral garlands, crowning a May Queen and setting up a Maypole, May Tree or May Bush, around which people dance. Bonfires are also part of the festival in some regions.
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Here’s where the major benchmarks ended:
The S&P 500 index fell 80.48 points (1.6%) to 5,035.69; the Dow Jones Industrial Average® ($DJI) lost 570.17 points (1.5%) to 37,815.92, down 5% for the month; the NASDAQ Composite declined 325.26 points (2.0%) to 15,657.82.
The 10-year Treasury note yield jumped more than 7 basis points to 4.682%.
The CBOE Volatility Index® (VIX) rose 0.98 to 15.65.
Energy shares were among the weakest performers Tuesday, behind a drop in WTI Crude Oil (/CL) futures, which fell a third consecutive session and briefly dropped under $81 per barrel. The Philadelphia Oil Service Index (OSX) tumbled 4.5% to a seven-week low. The small-cap Russell 2000® Index (RUT) shed 2.1% and ended with a loss of 7.1% for the month.
But, it was a better day for Mounjaro maker Eli Lilly, which climbed nearly 6% after its popular weight loss drugs pushed it to raise its 2024 forecast.
A class-action complaint was filed against MultiPlan and major payers like UnitedHealth Group and CVS Health’s Aetna, arguing payers’ claims data was being used to generate low reimbursement rates.
Posted on April 30, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
It’ll be a big week for hot takes on the US economy, after the Federal Reserve meeting Tuesday and Wednesday and the April jobs report dropping Friday. Because inflation has been sticking around, the FOMC is expected to hold interest rates steady at this meeting and for the foreseeable future. On the jobs front, economists are projecting another strong month for employment growth.
In 2022, with bipartisan support, Congress passed the CHIPS and Science Act, an ambitious plan to juice domestic manufacturing of a product vital to national security: semiconductors. Two years later, the government has doled out more than half of the CHIPS Act’s $39 billion in incentives. According to the Financial Times …
Chip companies and their suppliers have announced US investments of $327 billion over the next 10 years, per the Semiconductor Industry Association.
Construction of manufacturing facilities for computing and electronics devices has jumped 15x, government data shows.
By 2030, the US will likely produce around 20% of the world’s most advanced chips, according to USCommerce Secretary Gina Raimondo. Right now, it’s making 0%.
The proposed factories are massive and could transform regional economies. Micron, which received $6.1 billion in federal grants last week, plans to invest $100 billion in a manufacturing campus near Syracuse.
The S&P 500® index (SPX) rose 16.21 points (0.3%) to 5,116.17, its highest close in over two weeks; the Dow Jones Industrial Average® ($DJI) gained 146.43 points (0.4%) to 38,386.09, the NASDAQ Composite® ($COMP) advanced 55.18 points (0.4%) to 15,983.08.
The 10-year Treasury note yield (TNX) fell more than 5 basis points to 4.616%.
The CBOE Volatility Index® (VIX) declined 0.36 to 14.67.
Communication services shares were among the market’s weakest performers Monday, reversing last Friday’s upswing as Alphabet (GOOGL) dropped more than 3% and Meta Platforms (META) lost 2.4%. Banks and retailers were also soft. The Philadelphia Semiconductor Index (SOX) climbed for the sixth-straight day and ended near a three-week high even though its biggest member, Nvidia (NVDA), ended little changed.
In other markets, the U.S. Dollar Index ($DXY) faded from early gains but is still up about 1% in April, driven by expectations domestic rates will remain high. “The U.S. dollar’s strength continues to reflect the relative strength of the economy and the wide interest rate differentials between the United States and other major developed markets,” Schwab Center for Financial Research analysts said in a report.
Despite last week’s strength, the S&P 500 index and the NASAQ Composite are still down 2.6% and 2.4%, respectively, for April and on track to break five-month winning streaks.
Humana expects to exit Medicare Advantage (MA) markets in 2025, company executives told investors. The company reported its first quarter earnings April 24th. Humana posted $741 million in net income in the first quarter of 2024, beating investor expectations, but pulled its 2025 earnings guidance.
Posted on April 29, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Last week stocks shrugged off the news that the Fed’s favorite inflation gauge ticked up last month as strong earnings reports from Big Tech pushed them higher giving the NASDAQ and the S&P 500 their best weeks since November. Google parent Alphabet had its best day since July 2015 after showing that some of its Artificial Intelligence investments are paying off for its first-ever dividend distribution.
The New York Stock Exchange (NYSE) recently asked market participants to share how they’d feel about trading 24/7.
According to Morning Brew, The tradition-shattering proposal by the world’s busiest stock exchange, which operates from 9:30am to 4pm ET Monday–Friday, would make stocks no different from other assets that never stop trading, like crypto and government bonds.
The NYSE’s curiosity comes as the startup 24 Exchange, backed by Mets owner Steve Cohen, is seeking SEC permission to launch a round-the-clock stock exchange. 24 Exchange wants to cater to the growing contingent of amateur investors, some of whom prefer to trade after their kids go to bed. If the NYSE decides to become an exchange that never sleeps, it’d likely upend the day-to-day of the pros on Wall Street. So, let’s consider what 24/7 trading would look like, who’d be in the green, and who’s kept up at night by the prospect. For example:
The NYSE currently allows people to trade stocks outside regular hours from 4am until the market opens and after the closing bell until 8pm, but there are fewer participants trading, and those transactions often come with higher fees. Meanwhile, brokerages like Robinhood and Interactive Brokers have found success in letting investors put in orders for many stocks and stock indexes overnight.
Robinhood recently said its overnight trading options are a hit, with trading outside of the NYSE’s regular hours accounting for as much as 25% of activity on the platform.
Many customers aren’t used to waiting around for the NYSE to “ding a bell two times a day,” Robinhood’s Chief Brokerage Officer Steve Quirk told Bloomberg.
Many of these nocturnal transactions on brokerage apps happen because of the time difference with the Asia Pacific region, where investors are increasingly eager to tap into the US stock market when most Americans are asleep. The trades are enabled by organizations like Blue Ocean, which are seeing skyrocketing demand for cross-border services. Having the NYSE run 24/7 would make it easier for investors in different time zones to participate in the US stock market.
Proponents also say it could make morning trading less volatile by allowing investors to react to big news (like an Elon Musk tweet about Tesla) as soon as it happens rather than waiting for markets to open.
Meanwhile, stocks popped off last week thanks to Big Tech’s impressive earnings, with the S&P 500 and NASDAQ posting their best weeks since November. Nvidia notched its best weekly gain in almost a year (up 15%), adding nearly $290 billion in market capitalization.
Modern Portfolio Theory approaches investing by examining the complete market and the full economy. MPT places a great emphasis on the correlation between investments.
DEFINITION:
Correlation is a measure of how frequently one event tends to happen when another event happens. High positive correlation means two events usually happen together – high SAT scores and getting through college for instance. High negative correlation means two events tend not to happen together – high SATs and a poor grade record.
No correlation means the two events are independent of one another. In statistical terms two events that are perfectly correlated have a “correlation coefficient” of 1; two events that are perfectly negatively correlated have a correlation coefficient of -1; and two events that have zero correlation have a coefficient of 0.
Correlation has been used over the past twenty years by institutions and financial advisors to assemble portfolios of moderate risk. In calculating correlation, a statistician would examine the possibility of two events happening together, namely:
If the probability of A happening is 1/X;
And the probability of B happening is 1/Y; then
The probability of A and B happening together is (1/X) times (1/Y), or 1/(X times Y).
There are several laws of correlation including;
Combining assets with a perfect positive correlation offers no reduction in portfolio risk. These two assets will simply move in tandem with each other.
Combining assets with zero correlation (statistically independent) reduces the risk of the portfolio. If more assets with uncorrelated returns are added to the portfolio, significant risk reduction can be achieved.
Combing assets with a perfect negative correlation could eliminate risk entirely. This is the principle with “hedging strategies”. These strategies are discussed later in the book.
In the real world, negative correlations are very rare
Most assets maintain a positive correlation with each other. The goal of a prudent investor is to assemble a portfolio that contains uncorrelated assets. When a portfolio contains assets that possess low correlations, the upward movement of one asset class will help offset the downward movement of another. This is especially important when economic and market conditions change.
As a result, including assets in your portfolio that are not highly correlated will reduce the overall volatility (as measured by standard deviation) and may also increase long-term investment returns. This is the primary argument for including dissimilar asset classes in your portfolio. Keep in mind that this type of diversification does not guarantee you will avoid a loss. It simply minimizes the chance of loss.
In the table provided by Ibbotson, the average correlation between the five major asset classes is displayed. The lowest correlation is between the U.S. Treasury Bonds and the EAFE (international stocks). The highest correlation is between the S&P 500 and the EAFE; 0.77 or 77 percent. This signifies a prominent level of correlation that has grown even larger during this decade. Low correlations within the table appear most with U.S. Treasury Bills.
Posted on April 29, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
A SPECIAL REPORT
By Vitaliy N. Katsenelson CFA
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Uber’s business is doing extremely well. It has reached escape velocity – the company’s expenses have grown at a slow rate while its revenues are growing at 22% a year. This caused profit margins to expand and earnings and free cash flows to skyrocket. Our investment in Uber was based on the assumption that its services would become a utility – just like water and electricity. The company’s name is synonymous with ride sharing.
I must confess that the biggest risk to our investment in Uber is me. Yes, you read that right. Uber has an incredible growth runway. It is not just going after ride sharing and food delivery, where it still has plenty of room to grow, it is also making serious inroads into the grocery market. It has terrific management that is putting a lot of daylight between Uber and its competitors.
Posted on April 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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Republic First Bank. The FDIC said regulators seized the troubled Philadelphia-based bank and agreed to sell it to Fulton Bank. While news of a regional bank failure might take you back to March 2023 when Silicon Valley Bank bit the dust, Republic First was much smaller than SVB (and much smaller than the similarly named First Republic, which ultimately got absorbed by JPMorgan Chase as regional banks struggled). And, because there’s already a buyer, there are no lingering questions about the safety of deposits.
So, while the first bank failure of the year is a sign that regional banks are still in a bad way, it’s unlikely to spur a larger crisis.
It is critical for physician executives to understand and to measure the total cost of hospital capital. Lack of understanding and appreciation of the total cost of capital is widespread, particularly among not-for-profit hospital and physician executives. The capital structure includes long-term debt and equity; total capital is the sum of these two, and, each of these components has cost associated with it.
For the long-term debt portion, this cost is explicit—it is the interest rate plus associated costs of placement and servicing. For the equity portion, the cost is not explicit and is widely misunderstood. In many cases, hospital capital structures include significant amounts of equity that has accumulated over many years of favorable operations.
Far too many executives wrongly attribute zero cost to the equity portion of their capital structure. Although it is correct that generally accepted accounting principles continue to assign a zero cost to equity, there is opportunity cost associated with equity that needs to be considered. This cost is the opportunity available to utilize that capital in alternative ways.
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In general, the cost attributed to equity is the return expected by the equity markets on hospital equity. This can be observed by evaluating the equity prices of hospital companies whose equity is traded on public stock exchanges. Usually, the equity prices will imply cost of equity in the range of 10%–14%. Almost always, the cost of equity implied by hospital equity prices traded on public stock exchanges will substantially exceed the cost of long-term debt. Thus, while many hospital executives will view the cost of equity to be substantially less than the cost of debt (i.e., to be zero) in nearly all cases, the appropriate cost of equity will be substantially greater than the cost of debt.
Hospitals need to measure their weighted average cost of capital (WACC). WACC is the cost of long-term debt multiplied by the ratio of long-term debt to total capital plus the cost of equity multiplied by the ratio of equity to total capital (where total capital is the sum of long-term debt and equity).
WACC is then used as the basis for capital charges associated with all capital investments. Capital investments should be expected to generate positive returns after applying this capital charge based on the WACC. Capital investments that do not generate returns exceeding the WACC consume enterprise value; those that generate returns exceeding WACC increase enterprise value. Therefore, physician and hospital executives need to be rewarded for increasing enterprise value.
Some of the pioneers of behavioral finance are Drs. Kahneman, Twersky and Thaler. This short introduction to the subject is based on John Nofsinger’s little book entitled “Psychology of Investing” an excellent quick read for all medical professionals or anyone who is interested in learning more about behavioral finance.
Rational Decisions?
Much of modern finance is built on the assumption that investors “make rational decisions” and “are unbiased in their predictions about the future”, however this is not always the case.
Cognitive errors come from (1) prospect theory (people feel good/bad about gain/loss of $500, but not twice as good/bad about a gain/loss of $1,000; they feel worse about a $500 loss than feel good about a $500 gain); (2) mental accounting (meaning that people tend to create separate buckets which they examine individually), (3) Self-deception (e.g. overconfidence), (4) heuristic simplification (shortcuts) and (4) mood can affect ability to reach a logical conclusion.
John Nofsinger’s Book
The following are some of the major chapter headings in Nofsinger’s book, and represent some of the key behavioral finance concepts.
Overconfidence leads to: (1) excessive trading (which in turn results in lower returns due to costs incurred), (2) underestimation of risk (portfolios of decreasing risk were found for single men, married men, married women, and single women), (3) illusion of knowledge (you can get a lot more data nowadays on the internet) and (4) illusion of control (on-line trading).
Pride and Regret leads to: (1) disposition effect (not only selling winners and holding on to the losers, but selling winners too soon- confirming how smart I was, and losers to late- not admitting a bad call, even though selling losers increases one’s wealth due to the tax benefits), (2) reference points (the point from where one measures gains or losses is not necessarily the purchase price, but may perhaps be the most recent 52 week high and it is most likely changing continuously- clearly such a reference point will affect investor’s judgment by perhaps holding on to “loser” too long when in fact it was a winner.)
Considering the Past in decisions about the future, when future outcomes are independent of the past lead to a whole slew of more bad decisions, such as: (1) house money effect (willing to increase the level of risk taken after recent winnings- i.e. playing with house’s money), (2) risk aversion or snake-bite effect (becoming more risk averse after losing money), (3) trying to break-even (at times people will increase their willing to take higher risk to try to recover their losses- e.g. double or nothing), (4) endowment or status quo effect (often people are only prepared to sell something they own for more than they would be willing to buy it- i.e. for investments people tend to do nothing, just hold on to investments they already have) (5) memory and decision making ( decisions are affected by how long ago did the pain/pleasure occur or what was the sequence of pain and pleasure), (6) cognitive dissonance (people avoid important decisions or ignore negative information because of pain associated with circumstances).
Mental Accounting is the act of bucketizing investments and then reviewing the performance of the individual buckets separately (e.g. investing at low savings rate while paying high credit card interest rates).
Examples of mental accounting are: (1) matching costs to benefits (wanting to pay for vacation before taking it and getting paid for work after it was done, even though from perspective of time value of money the opposite should be preferred0, (2) aversion to debt (don’t like long-term debt for short-term benefit), (3) sunk-cost effect (illogically considering non-recoverable costs when making forward-going decisions). In investing, treating buckets separately and ignoring interaction (correlations) induces people not to sell losers (even though they get tax benefits), prevent them from investing in the stock market because it is too risky in isolation (however much less so when looked at as part of the complete portfolio including other asset classes and labor income and occupied real estate), thus they “do not maximize the return for a given level of risk taken).
In building portfolios, assets included should not be chosen on basis of risk and return only, but also correlation; even otherwise well educated individuals make the mistake of assuming that adding a risky asset to a portfolio will increase the overall risk, when in fact the opposite will occur depending on the correlation of the asset to be added with the portfolio (i.e. people misjudge or disregard interactions between buckets, which are key determinants of risk).
This can lead to: (1) building behavioral portfolios (i.e. safety, income, get rich, etc type sub-portfolios, resulting in goal diversification rather than asset diversification), (2) naïve diversification (when aiming for 50:50 stock:bond allocation implementing this as 50:50 in both tax-deferred (401(k)/RRSP) accounts and taxable accounts, rather than placing the bonds in the tax-deferred and stocks in taxable accounts respectively for tax advantages), (3) naïve diversification in retirement accounts (if five investment options are offered then investing 1/5th in each, thus getting an inappropriate level of diversification or no diversification depending on the available choices; or being too heavily invested in one’s employer’s stock).
Representativenes may lead investors to confusing a good company with a good investment (good company may already be overpriced in the market; extrapolating past returns or momentum investing), and familiarity to over-investment in one’s own employer (perhaps inappropriate as when stock tanks one’s job may also be at risk) or industry or country thus not having a properly diversified portfolio.
Emotions can affect investment decisions: mood/feelings/optimism will affect decision to buy or sell risky or conservative assets, even though the mood resulted from matters unrelated to investment. Social interactions such as friends/coworkers/clubs and the media (e.g. CNBC) can lead to herding effects like over (under) valuation.
Financial Strategies
Nofsinger finishes with a final chapter which includes strategies for:
(i) beating the biases: (1) Understand the biases, (2) define your investment objectives, (3) have quantitative investment criteria, i.e. understand why you are buying a specific investor (or even better invest in a passive fashion), (4) diversify among asset classes and within asset classes (and don’t over invest in your employer’s stock), and (5) control your investment environment (check on stock monthly, trade only monthly and review progress toward goals annually).
(ii) using biases for the good: (1) set new employee defaults for retirement plans to being enrolled, (2) get employees to commit some percent of future raises to automatically go toward retirement (save-more-tomorrow).
Assessment
Buy the book (you can get used copies through Amazon). As indicated it is a quick read and occasionally you may even want to re-read it to insure you avoid the biases or use them for the good. Also, the book has long list of references for those inclined to delve into the subject more deeply.
You might even ask “How does all this Behavioral Finance coexist with Efficient Market theory?” and that’s a great question that I’ll leave for another time.
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Posted on April 27, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Here’s where the major stock market benchmarks ended:
The S&P 500 index gained 51.54 points (1.0%) to 5,099.96, up 2.7% for the week; the Dow Jones Industrial Average® ($DJI) increased 153.86 points (0.4%) to 38,239.66, up 0.7% for the week; the NASDAQ Composite jumped 316.14 points (2.0%) to 15,927.90, up 4.2% for the week.
The 10-year Treasury note yield (TNX) lost about 4 basis points to 4.665%.
The CBOE Volatility Index® (VIX) fell 0.34 to 15.03.
Alphabet’s rally helped communication services reverse Thursday’s downturn, which was driven by disappointing quarterly results from Meta Platforms (META). The S&P 500 Communication Services index ($SP500#50) surged 4.7% Friday and ended the week with a 2.7% gain. Semiconductor shares were also strong, led by a 6% gain in Nvidia (NVDA). The Russell 2000® Index (RUT) added 1.1% Friday and posted a 2.8% advance for the week.
In other markets, WTI Crude Oil (/CL) futures rose slightly Friday, ending around $83.65 per barrel and shutting down a three-week losing streak.
Midi Health, a health clinic geared toward women in midlife, raised $60 million in Series B funding to expand its network to 150 clinicians by the end of the year, among other efforts. (MobiHealthNews)
“We’re fooling ourselves if we think that’s cheap or can be done less expensively.”—Carmela Coyle, president and CEO of the California Hospital Association, on hospital finances and cutting costs (AP)
The federal government implemented new staffing rules to improve patient care, but most nursing homes won’t be able to meet that demand. (KFF Health News/NPR)
The Biden administration is considering a change that would downgrade cannabis from a Schedule I drug to a Schedule III drug this year. The reclassification would have major effects on the business of cannabis, but for that to happen, the Drug Enforcement Agency needs proof of medical effectiveness.
Posted on April 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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New GDP numbers out yesterday show a worrying combo of stubborn inflation + waning growth that dampens hopes for a potential interest rate cut. Per the latest data from the Bureau of Economic Analysis, the first quarter of 2024 was a confounding one:
GDP increased at a 1.6% annualized rate, far below projections of 2.4% and notably down from 3.4% at the end of 2023.
While slow growth would typically signal that the Fed could cut rates, another metric complicates matters: Consumer prices (excluding volatile categories), a solid indicator of inflation, shot up to a much higher than anticipated 3.7%.
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Meta reported record Q1 revenue yesterday, but it was overshadowed by the billions of dollars the company is spending in its efforts to win the Artificial Intelligence race and make the Metaverse happen. Investors were unhappy with the company’s forecast that its spending will rise by $10 billion dollars to support Artificial Intelligence development, sending Meta’s stock price down 15% after hours.
Here’s where the major benchmarks ended:
The S&P 500 index fell 23.21 points (0.5%) to 5,048.42; the Dow Jones Industrial Average lost 375.12 points (1.0%) to 38,085.80; the NASDAQ Composite® ($COMP) shed 100.99 points (0.6%) to 15,611.76.
The 10-year Treasury note yield (TNX) rose about 5 basis points to 4.704%.
The CBOE Volatility Index® (VIX) fell 0.64 to 15.33.
Communication services shares were the weakest S&P 500 sector Thursday behind the plunge in Meta Platforms. Late Wednesday, the Facebook parent provided lighter-than-expected second-quarter revenue guidance, while CEO Mark Zuckerberg discussed spending in currently unprofitable pursuits such as artificial intelligence (AI) and mixed reality. Meta’s first-quarter earnings and revenue both came above analysts ‘ estimates, however.
Meta’s slump helped send the S&P 500 Communication Services index ($SP500#50) down 4%. Banks were also particularly soft amid concern that persistently high interest rates may compress lender margins. Semiconductor and transportation shares were among the few pockets of strength.
But, Alphabet, Microsoft, and Snap reported Q1 earnings yesterday, and were generally good. Alphabet issued its first-ever dividend and authorized $70 billion in stock buybacks, after it beat Wall Street’s revenue expectations. Microsoft also beat revenue forecasts on the strength of its cloud services. And Snap shares soared after it topped estimates and impressed investors with its 422 million global daily active users. It was a much-needed boost for the sector after Meta spooked the market with how much it’s spending on AI.
Posted on April 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Microsoft is looking at a broader AI future than just OpenAI
Microsoft has been at the forefront of the AI revolution through its $13 billion stake in the ChatGPT-maker, but recently it showed it’s also making other Artificial Intelligence bets, announcing it will pursue several partnerships and is investing $2.1 billion in French startup Mistral AI. Mistral’s tech will be available to Microsoft Azure users.
And then Microsoft President Brad Smithtold Axios that OpenAI CEO Sam Altman is “brilliant”, but …… Read Axios Story.
Perhaps even to counter Mark Zuckerbergs META Platform.
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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Posted on April 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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An uptick in corporate dealmaking fueled investment banking growth at the four largest US banks—JPMorgan Chase, Bank of America, Wells Fargo, and Citibank—as well as at Goldman Sachs and Morgan Stanley. The result was “one of [investment banking’s] best quarters” since the Fed began hiking rates in 2022, the Wall Street Journal reported. Their earnings releases over the last week either matched or beat the consensus forecasts for revenue and earnings per share, according to the WSJ.
“It’s clear that we’re in the early stages of a reopening of the capital markets,” Goldman Sachs CEO David Solomon said in an earnings call last Monday. Goldman reported that growth in its investment banking and trading pushed its net income up 28% year over year, beating analyst expectations. Solomon said he expects more M&A activity will keep boosting the demand for debt underwriting at Goldman, which saw a 32% Year over Year jump in internet-banking revenue.
Solomon’s sunny outlook was beclouded the next day by Fed Chair Jerome Powell. The Fed had hoped inflation reports would show it could cut rates soon without overheating the economy, but instead inflation has continued to tick up.
Posted on April 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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Otherwise known as “National Prescription Drug Take Back Day,” National Drug Take Back Day on April 25th is sponsored by the Drug Enforcement Agency. Its goal is to keep the public aware of the dangers of prescription drug use and misuse. Many Americans don’t know how to safely dispose of the prescription drugs that have been sitting in the medicine cabinet past their prime. Using these expired drugs, or using someone else’s, is dangerous and puts both the public and the environment at risk.
Spotify made money in Q1. According to Morning Brew, the streaming music giant grew its revenue last quarter by 20% to $3.8 billion on a record $180 million in profit, it announced yesterday. The smash report comes after Spotify cut costs last year, which included laying off more than a quarter of its workforce. The company also raised prices in 2023 for the first time in a decade as it further expanded beyond music into audio books and other categories. Spotify shares soared ~11% following the news.
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Here’s where the major benchmarks ended:
The S&P 500 index® (SPX) rose 1.08 points (0.02%) to 5,071.63; the Dow Jones Industrial Average® ($DJI) fell 42.77 points (0.1%) to 38,460.92; the NASDAQ Composite® ($COMP) added 16.11 points (0.1%) to 15,712.75.
The 10-year Treasury note yield rose more than 4 basis points to 4.644%.
The CBOE Volatility Index® (VIX) rose 0.28 to 15.97.
Transportation shares were among the market’s weakest performers Wednesday behind a drop of more than 10% in Old Dominion Freight Line (ODFL), which reported lighter-than-expected quarterly revenue. The shipper’s nosedive helped send the Dow Jones Transportation Average ($DJT) down 2.3%. Consumer staples, semiconductors, and utilities posted moderate advances. The Dow Jones Utility Index ($DJU) gained for the sixth straight day and ended at a three-and-a-half-month high.
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The National Association of Realtors’ $418 million settlement over an alleged conspiracy to inflate commissions received preliminary approval yesterday. It’s a new world order: Sellers won’t have to pay buyers’ agents anymore. There’s been talk of a metaphorical death of real estate agents, or a mass extinction; the jury is still out, but RE/MAX cofounder and chairman Dave Liniger doesn’t seem too concerned.
The Labor Department announced it has finalized its Retirement Security Rule, which aims to protect American workers who are saving for retirement and relying on advice from fiduciaries for it. The new rule will update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.
Clinicians don’t always get it right, and their mistakes can be costly: Studies show misdiagnoses lead to roughly 800,000 patient deaths or permanent disabilities each year in the US and cost the healthcare system an estimated $20 billion annually. Cleveland Clinic is using telehealth to try to combat misdiagnoses via its virtual second opinions program, which has saved an average of $8,705 per patient by avoiding unnecessary treatments, according to an analysis released in March.
We have partnered with fiduciary focused financial advisors and fee-only financial consultants who understand the needs of doctors, dentists and medical professionals. More importantly, they understand how the healthcare industrial complex is currently in flux.
Posted on April 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Tesla’s pivotal earnings call yesterday had the vibes of an undergrad at office hours begging for extra credit after failing every assignment all semester. The automaker whiffed on revenue targets, even after tempering expectations.
And, forthe first time since 2020, the EV-maker’s quarterly revenue dropped, falling to $21.3 billion, compared with $23.3 billion from the same period a year ago (analysts were expecting about $22b). Tesla’s profits sunk to a six-year low. The company said earlier this month that it only delivered 386,810 cars in the first quarter, down 8.5% from the same time in 2023.
On the bright side according to Morning Brew, despite the earnings miss, Tesla’s stock went up in after-hours trading, likely because the company vowed to accelerate the launch of more affordable models. It announced it was working on integrating ride-hailing technology into its app in a bid to take on Uber, and that the growth of its energy storage business is set to outpace that of its auto business this year.
That signal came amid broader concern that Tesla would move away from its traditional car making roots in favor of a business model focused on autonomous driving, robotics and AI-related technologies. It triggered an after-hours jump in Tesla stock that was cemented by a shareholder-friendly conference call from Chief Executive Elon Musk.
“I think we’ll have higher sales this year than last year,” Musk told investors, even as the group reiterated its forecast for “notably lower” vehicle deliveries for the current year.
Posted on April 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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Stat: 740. That’s how many employees Nike will lay off at its Oregon HQ before the end of June. In February, Nike CEO John Donahoe informed employees of the company’s plan to reduce 2% of its workforce, which would mean around 1,600 employees in total. (USA Today)
Let’s say you leave your job at any time during or after the calendar year you turn 55 (or age 50 if you’re a public safety employee with a government defined-benefit plan). Under a little-known separation-of-service provision, often referred to as the “rule of 55,” you may be able take distributions (though some plans may allow only one lump-sum withdrawal) from your 401(k), 403(b), or other qualified retirement planfree of the usual 10% early-withdrawal penalties. However, be aware that you’ll still owe ordinary income taxes on the amount distributed. This exception applies only to the plan (including any consolidated accounts) that you were contributing to when you separated from service. It does not extend to IRAs.
The S&P 500 index rose 59.95 points (1.2%) to 5,070.55; the Dow Jones Industrial Average gained 263.71 points (0.7%) to 38,503.69; the NASDAQ Composite® ($COMP) surged 245.33 points (1.6%) to 15,696.64.
The 10-year Treasury note yield (TNX) decreased about 2 basis points to 4.602%.
The CBOE Volatility Index® (VIX) fell 1.25 to 15.69.
Similar to Monday, chipmakers were among the market’s strongest areas, carrying the Philadelphia Semiconductor Index (SOX) to a 2.2% advance. Retailers and communication services shares were also strong. The Dow Jones Utility Index ($DJU) gained for the fifth straight day and ended at its highest level in over three months. The Russell 2000® Index (RUT) surged nearly 2%.
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