BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Posted on May 13, 2025 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.
During the 2024–25 Annual Enrollment Period, Medicare Advantage drew in only 1.3 million new members, compared to 2+ million in each of the five years prior, according to a March 25 report by consulting firm HealthScape Advisors. Traditional fee-for-service Medicare grew by about 200,000 after years of losing hundreds of thousands of members, according to HealthScape. During the 2023–24 AEP, it lost about 800,000.
Semiconductor stocks that looked like some of the biggest losers of the trade war just last week soared on today’s China/US deal. Nvidia popped 5.44%, TSMC rose 5.93%, AMD climbed 5.13%, Broadcom rose 6.43%, and Qualcomm gained 4.78%.
Magnificent Seven stocks also shot higher, particularly Apple (6.31%) and Amazon (8.07%), two companies that were bearing the brunt of higher tariffs.
Tesla jumped 6.75% on the tariff deal news, given a massive production plant that was responsible for 22% of Tesla’s total revenue last year is located in China.
US-listed Chinese stocks popped, for obvious reasons: JD.com gained 6.47%, Alibaba rose 5.82%, and Baidu climbed 5.08%.
Healthcare company Kindly MD soared 251.03% today after merging with Nakamoto, a bitcoin investment company founded by Trump’s crypto advisor David Bailey.
NRG Energy popped 26.21% after it agreed to acquire a slew of natural gas facilities from LS Power Equity Advisors.
Next Technology Holding soared 38.56% after the software company added 5,000 bitcoin to its portfolio and said it wants to add even more.
What’s down
EchoStar tumbled 16.58% today after the Wall Street Journal reported that the Federal Communications Commission was opening an investigation into the firm’s 5G network.
A slew of metal mining stocks fell today as gold declined on the tariff deal: AngloGold Ashanti fell 10.31%, Wheaton Precious Metals dropped 7.92%, NewmontCorporation lost 5.93%, and Gold Fields Limited sank 10.47%.
The Dow Jones exploded 1,000 points in pre-market trading, and the rally never waned toay. Both the Dow and the S&P 500 are nearly back to even for the year, while the NASDAQ clawed its way out of bear market territory.
Bonds tumbled while yields soared as the market pushed the timing for the Fed to cut interest rates back from July to September.
Gold sank as traders passed right on by the go-to investment for safety and sprinted straight toward equities.
Crude oil popped on the hopes of stronger economic growth for both the US and China now that the two countries are finally engaging in trade discussions.
Posted on May 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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I am back from what has become over the past two decades an annual pilgrimage to Omaha.
What’s fascinating about this trip is that it has everything and nothing to do with Warren Buffett. The main event that draws everyone to Omaha – the Berkshire Hathaway (BRK) annual meeting – is actually the least important part. I could have watched the shareholder meeting livestreamed on YouTube from the comfort of my living room couch.
The emergence of the Berkshire phenomenon reminds me of China’s manufacturing evolution. China initially attracted capital because of its cheap labor. But over time, China took this capital and plowed it into infrastructure. Factories were built next to each other, each specializing in certain areas. A specialized ecosystem emerged.
Today, Chinese labor is no longer cheap. It’s been replaced by automation, and now China is a powerhouse for manufacturing anything and everything.
The transformation that the BRK weekend has undergone followed a similar progression. Initially, the only way to absorb Buffett and Munger’s wisdom was to come to Omaha, as the event was not streamed. But then something interesting happened. The BRK weekend attracted people who shared the same value system, and friendships were formed. A variety of smaller events began to be scheduled throughout the same weekend across Omaha, and an equally specialized ecosystem emerged.
The shareholder meeting began to be streamed about ten years ago, but that has had no impact on attendance. This is one reason why I think Buffett is at peace with the idea of no longer presiding at the meeting – people will still come to Omaha the weekend before Mother’s Day. The BRK weekend now features dozens of excellent events.
I spoke at several, including an investing panel at Creighton University, alongside the wonderful Bob Robotti, a die-hard value investor who runs Robotti & Co. I’ve known Bob for years – at 72, he exhibits the same enthusiasm for stocks as someone decades younger – and this panel was an excellent example of what the BRK Omaha ecosystem has produced.
Bob and I have very different approaches to value investing. He loves cyclical businesses, while I generally shun them. Bob mentioned that he’d buy a very cheap business run by a mediocre manager, while I would not touch it with a ten-foot pole.
There is absolutely nothing wrong with either approach; indeed, there is an important lesson in it. Your investment philosophy and process have to fit your personality and your EQ. In my case, I get nervous (and thus irrational) when I own companies run by imbeciles who don’t have either skin or soul in the game. But the great thing about the BRK weekend is that I learn from Bob every time I spend time with him. He’s a thoughtful and genuinely kind human being.
From the outside, the BRK weekend may seem like a place where people simply want to learn how to get and stay rich. But this gathering transcends value investing and capitalism and genuinely celebrates human values. People (like me) bring their kids to this event. And just like at the main event, at the Q&A breakfast I hosted for my readers, many questions centered on life rather than investing.
My first Omaha reader meetup fit around a small restaurant table. This year, to my surprise, 450 people packed into a venue with standing-room only. I answered questions on every imaginable topic for just over two hours, and by the end I was exhausted.
This gave me even greater admiration for Buffett, who is four decades my senior, yet still fielded questions for four solid hours. I was delighted to hear Warren give a similar answer to one I had given the day before when asked what advice he’d give to graduating students: “Don’t worry too much about starting salaries and be very careful who you work for because you will take on the habits of the people around you.”
(Incidentally, we are going to host our next Q&A Breakfast on May 1, 2026. You can sign up for it here. It’s free, but I suggest you sign up early, as it fills up fast.)
I also participated (as I have for over a decade) in an investing panel at YPO (Young President Organization) in the beautiful Holland Performance Art Center with Tom Gaynor, CEO of Markel (often described as a baby Berkshire Hathaway) and Lawrence Cunningham. Lawrence authored perhaps the most important book about Buffett, The Essays of Warren Buffett, masterfully editing Warren’s annual letters into a cohesive volume. This year’s panel was one of those occasions where I found myself listening intently to my fellow panelists instead of speaking more.
Lawrence has met Greg Abel – Buffett’s designated successor – and feels optimistic about him. He’s probably right – this was one of Buffett’s most crucial decisions, which he did not make lightly. Yet I can’t imagine sitting for four hours listening to Greg Abel. I am sure he is a brilliant CEO, but he’s neither Buffett nor Munger – few individuals possess so much worldly wisdom and communicate it with such clarity and humor.
This brings me to the point of this note: the dramatic (yet not unexpected) announcement that Buffett is stepping down as CEO of BRK at the end of the year.
Before I comment on this, let me tell you a story. Imagine you have been watching a soap opera for 17 years. You arrive dutifully every year to watch every episode in person. And then you miss the last five minutes of the explosive finale before it goes off the air. This is what happened to me when Buffett announced his retirement as CEO.
A few minutes before noon, while Buffett was answering a question I’d heard before and appeared to be winding down, I suggested we slip out early for lunch to avoid the crowds. When we came back, I discovered that the meeting had gone on until 1 pm, and just before it ended, Buffett announced that he would step down at the end of the year. Seventeen years of watching Warren speak and I missed the most dramatic moment of all, followed by a five-minute standing ovation.
I think Buffett has engineered his exit brilliantly. He will still remain chairman, and even before the announcement he was not managing BRK’s day-to-day operations. As a collection of hundreds of companies that often have absolutely nothing in common with each other, BRK is already highly decentralized. Buffett’s main contribution has been capital allocation.
Giving up the CEO title while he’s still alive means Buffett has brought in his replacement in an orderly way and created a smooth transition. But I have a feeling that on January 1, 2026, when Greg Abel officially becomes CEO, nothing will really change, and Warren will continue doing what he’s been doing for as long as he can. If Buffett is able – he’ll be 95 – he’ll still drive to the office and stop by McDonald’s for a breakfast sandwich (there’s a lot of wisdom in finding pleasure in little things). His son Howard Buffett will become chairman after Warren, with his only job being to preserve the culture. I’ve been asked what I think of BRK stock. We bought the stock during the pandemic. It has done better than I expected, in part because of the strong performance of Apple, which was BRK’s largest holding. But BRK today is an unexciting investment at its current price. In all honesty, it is a conglomerate with some good and some merely okay businesses.
As a consumer, I get a (small) glimpse into how BRK businesses are being run by visiting Dairy Queen. BRK owns DQ, and I love their soft-serve ice cream (though I only eat it when I travel). My favorite part of research!
DQ has (or maybe had) a strong brand and operates on a capital-light model as a franchisor. But most stores I have visited looked like they have been neglected and need fresh paint. To be sure, I understand the limitations of this “analysis,” and DQ overall amounts to a rounding error on BRK’s financials. But little things often reveal much about big things.
BRK’s big businesses, from what I can glean through their financials, are not particularly well managed – GEICO and BNSF (railroad) have definitely been undermanaged lately. BNSF is not nearly as efficient as its competitors that embraced precision railroading, and until recently GEICO was losing market share to Progressive.
BRK’s reinsurance business, a significant source of BRK’s profitability, is run by the extraordinary Ajit Jain. Ajit is in his 70s and unfortunately it seems he is not in great health. Is his replacement going to shoot the lights out, like he did? We don’t know. But Ajit is probably more important to BRK today than Buffett.
BRK is not going to melt into oblivion after Buffett is gone, but its best days are behind it. As Buffett has acknowledged, just its size alone makes it very difficult for BRK to grow. Truth be told, even if Buffett were thirty years younger and continued to run BRK, I am not sure the results would be much different than what I think the future holds with Abel at the helm.
Buffett and Charlie Munger had a tremendous impact on me as an investor and human being. I am incredibly thankful to both. I hope Warren is there next year, but, in either case, I will be.
Posted on May 5, 2025 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.
U.S. stock futures declined after the S&P 500 notched its longest winning streak in more than 20 years last week. Dow Jones Industrial Average futures were down around 280 points, or 0.7%, as of 11 p.m. Eastern. S&P 500 futures and NASDAQ-100 futures were off about 0.8%.
The labor market stayed strong. The US added 177,000 jobs in April, while unemployment stayed steady at 4.2%, new Labor Department data shows. That was slightly less job growth than the month before, but still more than expected, and it shows a resilient labor environment even as the president’s introduction of tariffs roiled the stock and bond markets and raised concerns about a recession. President Trump celebrated the news in a Truth Social post that once again urged the Fed to cut interest rates.
Markets: Stocks soared like a balloon whose string a toddler couldn’t keep hold of yesterday. Unexpectedly strong jobs data for last month and reports that China is open to trade talks helped push the S&P 500 to its longest winning streak in more than 20 years (more on that later), erasing the losses from recent tariff turmoil. On its own impressive streak is Netflix, which hit an all-time high and finished its 11th day in the green for its longest positive run ever.
Crude oil futures dropped more than 3% Sunday after OPEC+ agreed to accelerate production increases for a second straight month in June by 411K bbl/day.
U.S. WTI crude (CL1:COM) for June delivery recently traded -3.4% at $56.28/bbl and July Brent crude (CO1:COM) -3.2% at $59.34/bbl, with both front-month contracts touching their lowest levels since April 9th.
Visualize: How private equity tangled banks in a web of debt, from the Financial Times.
Posted on April 30, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
FUNDAMENTAL INDUSTRY CHANGES
By Staff Reporters
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Index Funds
An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy.
Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all (or a representative sample) of the stocks or bonds in the index it tracks.
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Quantum Computing
Unlike traditional computers that use bits, quantum computers utilize qubits. These qubits are capable of being in a state of superposition, where they can represent both 0 and 1 simultaneously, enabling the processing of multiple calculations at once. This could allow quantum computers to outperform classical computers in solving certain complex problems. However, the field is still overcoming challenges such as qubit stability and decoherence; especially in these three areas:
Quantum computing could fundamentally alter healthcare by accelerating drug discovery and improving individualized medicine. Rapid analysis of enormous volumes of biological data allows quantum computers to find trends that might guide the creation of more potent treatments. In addition to accelerating drug development, this will enable customized treatments tailored to unique genetic profiles.
Faster and more accurate financial models produced by quantum computing will transform the banking sector. Through real-time analysis of intricate financial systems, it can help investors to control risk and make better decisions. More precise market forecasts will help maximize portfolio management and trading strategies.
Through greatly enhanced medical diagnosis and patient care, quantum computing can transform the healthcare industry. Quantum computers can remarkably accurately find trends and possible health hazards by analyzing enormous volumes of medical data in a fraction of the time. Early diagnosis and more customized treatment alternatives follow from this.
B–QTUM Index Fund
Index Description: The BlueStar® Machine Learning and Quantum Computing Index (BQTUM) tracks liquid companies in the global quantum computing and machine learning industries, including products and services related to quantum computing or machine learning, such as the development or use of quantum computers or computing chips, superconducting materials, applications built on quantum computers, embedded artificial intelligence chips, or software specializing in the perception, collection, visualization, or management of big data.
The Zweig Breadth Thrust may sound like an extremely difficult yoga position, but it’s actually a bullish technical indicator with an extraordinary record of 100% accuracy that was just triggered.
Created by investment advisor and author Martin Zweig, the indicator takes the 10-day moving average of the number of advancing stocks across the market and divides it by the number of advancing stocks plus the number of declining stocks. When the resulting percentage rises from below 40% to above 61.5% in 10 trading days, it’s a sign that stocks are rapidly going from oversold to overbought.
The math is a bit complicated, but Carson Research’s Chief Market Strategist Ryan Detrick certainly thinks highly of it.
According to the chart that he just posted on X, the Zweig Breadth Thrust has a perfect record of predicting market gains 6 and 12 months after it appears.
With the indicator triggering on Friday, here’s hoping that we can continue to trust the Zweig Thrust.
Posted on April 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Rick Kahler CFP™
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On January 21, 1980, in what I thought was a brilliant financial move, I bought gold. At what was then an all-time high of $873 an ounce.
Fast forward 45 years, and here we are again. Gold is on a tear, priced just over $3,000 an ounce at the time of this writing. It needs to rise another 16% to reach its inflation-adjusted record and many analysts think it might just get there.
What’s driving this gold rally? The same thing that drove it in 1980—fear.
Back then, the U.S. was grappling with rising inflation, double-digit price increases, and interest rates in the high teens. Investors feared that the dollar and stock market would collapse, that their hard-earned savings would erode into oblivion, and that gold was a safe haven. Sound familiar?
Today, inflation is less dramatic and the stock market would have to go a long way down to even register as a bear market, but it’s still a major concern. Central banks are buying gold at record levels. Gold-backed ETFs, which had been seeing years of outflows, are finally pulling investors back in.
For most, gold isn’t just an investment, it’s an emotional hedge against uncertainty. Back in 1980, I wasn’t thinking about long-term strategy. I was reacting to fear. Inflation had hit 14%, and like many others, I was convinced the dollar would soon be worthless. Gold, I thought, was my best shot at preserving wealth.
The problem? Inflation eventually cooled; it had dropped to an average of 3.5% by the mid-1980s. Gold prices tumbled along with it. Investors who, like me, bought at the peak, 45 years later still haven’t broken even on an inflation-adjusted basis. (My $873 purchase price, adjusted for inflation, equates to $3,580 today.) If I had stuck with a well-diversified portfolio, I likely would have fared much better over time.
Over the years, I’ve come to realize that our financial decisions aren’t just about numbers. They’re deeply influenced by our Internal Financial System™, a framework that helps explain why we handle money the way we do. I now see that my decision to buy gold was a battle between different financial “parts” of myself.
One part panicked, convinced that money was about to become worthless. Another saw gold prices soaring and didn’t want to miss out. Yet another part convinced me that buying at the peak was still a smart move. Had I paused and examined these internal voices, I might have made a different decision.
My gold purchase shows why emotionally driven investment decisions rarely lead to great financial outcomes. Instead of asking, “Is gold a smart long-term investment?” I was asking, “How do I make sure I don’t lose everything?” Those are two very different questions.
If you’re thinking about buying gold, I urge you to consider these questions:
“Am I investing from a place of fear or strategy?” If you’re rushing in because you’re scared of inflation, pause and reassess.
“How does gold fit into my broader financial plan?” Gold can be a great hedge—if held in appropriate amounts in a diversified portfolio. It is best viewed as catastrophic financial insurance, rather than an investment.
“Am I reacting to headlines or making a well-thought-out decision?” The financial media loves a good gold rally. But remember, markets move in cycles. Today’s rally may be history repeating itself.
Back in 1980, fear persuaded me that gold was a sure thing. I forgot an essential caveat—there are no sure things in investing. If bad market timing were an Olympic sport, I’d have taken home the gold (pun intended) for least profitable performance.
An annuity is a contract between you and an insurance company. When you purchase an annuity, you make a lump-sum contribution or a series of contributions, generally each month. In return, the insurance company makes periodic payments to you beginning immediately or at a pre-determined date in the future. These periodic payments may last for a finite period, such as 20 years, or an indefinite period, such as until both you and your spouse are deceased. Annuities may also include a death benefit that will pay your beneficiary a specified minimum amount, such as the total amount of your contributions.
The growth of earnings in your annuity is typically tax-deferred; this could be beneficial as you may be in a lower tax bracket when you begin taking distributions from the annuity.
Warning: A word of caution: Annuities are intended as long-term investments. If you withdraw your money early from an annuity, you may pay substantial surrender charges to the insurance company as well as tax penalties to the IRS and state.
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There are three basic types of annuities — fixed, indexed, and variable
1. With a fixed annuity, the insurance company agrees to pay you no less than a specified (fixed) rate of interest during the time that your account is growing. The insurance company also agrees that the periodic payments will be a specified (fixed) amount per dollar in your account.
2. With an indexed annuity, your return is based on changes in an index, such as the S&P. Indexed annuity contracts also state that the contract value will be no less than a specified minimum, regardless of index performance.
3. A variable annuity allows you to choose from among a range of different investment options, typically mutual funds. The rate of return and the amount of the periodic payments you eventually receive will vary depending on the performance of the investment options you select.
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Several years ago a group of highly trusted and deeply experienced financial advisors, insurance service professionals and estate planners noted that far too many of their mature retiring physician clients, using traditional stock brokers, management consultants and financial advisors, seemed to be less successful than those who went it alone. These Do-it-Yourselfers [DIYs] had setbacks and made mistakes, for sure. But, the ME Inc doctors seemed to learn from their mistakes and did not incur the high management and service fees demanded from general or retail one-size-fits-all “advisors.”
In fact, an informal inverse related relationship was noted, and dubbed the “Doctor Effect.” In others words, the more consultants an individual doctor retained; the less well they did in all disciplines of the financial planning and medical practice management, continuum.
Of course, the reason for this discrepancy eluded many of them as Wall Street brokerages and wire-houses flooded the media with messages, infomercials, print, radio, TV, texts, tweets, dinners and internet ads to the contrary. Rather than self-learn the basics, the prevailing sentiment seemed to purse the holy grail of finding the “perfect financial advisor.” This realization confirmed the industry culture which seemed to be:
Bread for the advisor – Crumbs for the client!
And so, Marcinko Associates formed a cadre’ of technology focused and highly educated multi-degreed doctors, nurses, financial advisors, attorneys, accountants, psychologists and educational visionaries who decided there must be a better way for their healthcare colleagues to receive financial planning advice, products and related advisory services within a culture of fiduciary responsibility.
We trust you agree with this specific niche knowledge, and collegial consulting philosophy, as illustrated thru our firm and these two books.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
Posted on April 20, 2025 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.
Markets: The markets were closed for Good Friday giving investors time to take a breather amid tariff-induced volatility after all three major indexes finished the short trading week in the red.
Stock spotlight: As a sign of just how confusing it is out there, United Airlines stock rose this week after the company released two different forecasts—one for a stable economy and one for a possible US recession.
A $35 billion merger between Capital One and Discover that would make Capital One the nation’s largest credit card issuer cleared a major regulatory hurdle this week, according to multipleoutlets, as the Justice Department told antitrust officials it did not find reasons to block the deal, paving the way for a potentially historic shakeup of the American credit card space.
When you buy a share of stock, you are taking ownership in a company. Collectively, the company is owned by all the shareholders, and each share represents a claim on assets and earnings. If the company distributes profits to its shareholders, you should receive a proportionate share of the earnings.
Stocks are often categorized by the size of the company, or their market capitalization. The market capitalization is determined by multiplying the number of outstanding shares by the current share price. The most common market cap classes are small-cap (valued from $100 million to $1 billion), mid-cap ($1 billion to $10 billion), and large cap ($10 billion to $100 billion).
Stocks are also categorized by their sector, or the type of business the company conducts. Common sectors include utilities, consumer staples, energy, communications, financial, health care, transportation, and technology.
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Stocks are often viewed as being in one of two categories — growth or value.
Growth stocks are ones that are associated with high quality, successful companies that are expected to continue growing at a better-than-average rate as compared to the rest of the market.
Value stocks are ones that have generally solid fundamentals, but are currently out of favor with the market. This may be due to the company being relatively new and unproven in the market, or because the company has recently experienced a decline due to the company’s sector being affected negatively. An example of this would be if the federal government was to levy a new tax on all cell phones, thus negatively affecting all cell phone company stocks.
History has shown that, over time, stocks have provided a better return than bonds, real estate, and other savings vehicles. As a result, stocks may be the ideal investment for investors with long-term goals.
Posted on April 18, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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U.S. stock and bond markets will be closed on Good Friday. Many global markets will also be closed Friday. Exceptions include Japan and mainland China, which will be open as usual. U.S. markets will reopen Monday. Many international markets will remain shut to mark Easter Monday, including Australia, Hong Kong, and exchanges in France, Germany and the U.K.
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YESTERDAY 4/17/25
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🟢 What’s up
TSMC eked out a 0.10% gain after the semiconductor maker reported a 60% increase in profits last quarter and downplayed the effects of tariffs.
Charles Schwab isn’t just the guy who made $2 billion from market chaos last week. It’s also the brokerage that reported record quarterly revenue, but shares only rose 0.65%.
Hertz climbed another 43.87%, tacking on another day of big wins after Bill Ackman’s Pershing Square Capital took a stake in the rental car company.
Trump Media & Technology Group popped 11.65% after the company asked the SEC to investigate a hedge fund with a $105 million short bet against it.
Chinese tea chain Chagee soared 15.86% in its first day of trading on the Nasdaq.
DR Horton missed analyst expectations last quarter and lowered its fiscal year guidance, but investors quickly forgave the country’s largest homebuilder and pushed shares up 3.16%.
What’s down
Alphabet took a 1.38% hit after a federal judge ruled that Google is a monopoly. This marks Alphabet’s second antitrust loss since last August.
Alcoa fell 6.98% after the aluminum mining behemoth announced it ate about $20 million in tariff-related costs last quarter, noting that this figure could rise to $90 million in the current quarter.
Abbott Laboratories gained 2.77% after the pharma company missed sales estimates but still beat earnings forecasts.
Gold miners continue to climb as gold keeps hitting new highs. Newmont rose 2.51%, while Gold Fields gained 3.35%.
What’s down
Tesla sank 4.94% after the company’s share of EV sales in California fell below 50% in the first quarter, while export controls threaten plans to produce Cybercabs in the US.
United Airlines fell 0.01% despite reporting its “best first-quarter financial results in five years,” according to management. The airline took the unique measure of providing two different financial outlooks for the year ahead: one for a stable economy, and one for a recession.
Lyft shed just 0.46% on the news that the ride-hailing company is acquiring European taxi app Free Now for $199 million.
Interactive BrokersGroup reported a 47% increase in trading volume last quarter that helped it beat revenue expectations, but the brokerage still tumbled 8.95% after missing profit forecasts.
Palantir gave up some of its recent gains following its big NATO announcement, sinking 5.78% today as investors collected profits.
JB HuntTransport Services’ management team warned that the logistics company sits squarely in the crosshairs of the trade war, pushing shares down 7.68%.
Omnicom Group tumbled 7.28% after the advertising firm missed revenue estimates thanks to economic uncertainty.
Posted on April 14, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
OVER HEARD IN THE FINANCIAL ADVISOR’S LOUNGE
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By Perry D’Alessio, CPA [D’Alessio Tocci & Pell LLP]
What I see in my accounting practice is that significant accumulation in younger physician portfolio growth is not happening as it once did. This is partially because confidence in the equity markets is still not what it was; but that doctors are also looking for better solutions to support their reduced incomes.
For example, I see older doctors with about 25 percent of their wealth in the market, and even in retirement years, do not rely much on that accumulation to live on. Of this 25 percent, about 80 percent is in their retirement plan, as tax breaks for funding are just too good to ignore.
What I do see is that about 50 percent of senior physician wealth is in rental real estate, both in a private residence that has a rental component, and mixed-use properties. It is this that provides a good portion of income in retirement.
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QUESTION: So, could I add dialog about real estate as a long term solution for retirement?
Yes, as I believe a real estate concentration in the amount of 5 percent is optimal for a diversified portfolio, but in a very passive way through mutual or index funds that are invested in real estate holdings and not directly owning properties.
Today, as an option, we have the ability to take pension plan assets and transfer marketable securities for rental property to be held inside the plan collecting rents instead of dividends.
Real estate holdings never vary very much, tend to go up modestly, and have preferential tax treatment due to depreciation of the property against income.
Posted on April 14, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Beneficiary designations can provide a relatively easy way to transfer an account or insurance policy upon your death. However, if you’re not careful, missing or outdated beneficiary designations can easily cause your estate plan to go awry.
Where you can find them
Here’s a sampling of where you’ll find beneficiary designations:
In several states, so-called “lady bird” deeds for real estate
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10 tips about beneficiary designations
Because beneficiary designations are so important, keep these things in mind in your estate planning:
Remember to name beneficiaries. If you don’t name a beneficiary, one of the following could occur:
The account or policy may have to go through probate. This process often results in unnecessary delays, additional costs, and unfavorable income tax treatment.
The agreement that controls the account or policy may provide for “default” beneficiaries. This could be helpful, but it’s possible the default beneficiaries may not be whom you intended.
Name both primary and contingent beneficiaries. It’s a good practice to name a “back up” or contingent beneficiary in case the primary beneficiary dies before you. Depending on your situation, you may have only a primary beneficiary. In that case, consider whether it may make sense to name a charity (or charities) as the contingent beneficiary.
Update for life events. Review your beneficiary designations regularly and update them as needed based on major life events, such as births, deaths, marriages, and divorces.
Read the instructions. Beneficiary designation forms are not all alike. Don’t just fill in names — be sure to read the form carefully. If necessary, you can draft your own customized beneficiary designation, but you should do this only with the guidance of an experienced attorney or tax advisor.
Coordinate with your will and trust. Whenever you change your will or trust, be sure to talk with your attorney about your beneficiary designations. Because these designations operate independently of your other estate planning documents, it’s important to understand how the different parts of your plan work as a whole.
Think twice before naming individual beneficiaries for particular assets. For example, you may establish three accounts of equal value initially and name a different child as beneficiary of each account. Over the years, the accounts may grow or be depleted unevenly, so the three children end up receiving different amounts — which is not what you originally intended.
Avoid naming your estate as beneficiary. If you designate a beneficiary on your 401(k), for example, it won’t have to go through probate court to be distributed to the beneficiary. If you name your estate as beneficiary, the account will have to go through probate. For IRAs and qualified retirement plans, there may also be unfavorable income tax consequences.
Use caution when naming a trust as beneficiary. Consult your attorney or CPA before naming a trust as beneficiary for IRAs, qualified retirement plans, or annuities. There are situations where it makes sense to name a trust — for example if:
Your beneficiaries are minor children
You’re in a second marriage
You want to control access to funds
Be aware of tax consequences. Many assets that transfer by beneficiary designation come with special tax consequences. It’s helpful to work with an experienced tax advisor to help provide planning ideas for your particular situation.
Use disclaimers when necessary — but be careful. Sometimes a beneficiary may actually want to decline (disclaim) assets on which they’re designated as beneficiary. Keep in mind that disclaimers involve complex legal and tax issues and require careful consultation with your attorney and CPA.
Posted on April 13, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Convertible Arbitrage
Convertible arbitrage is the oldest market-neutral strategy. Designed to capitalize on the relative mispricing between a convertible security (e.g. convertible bond or preferred stock) and the underlying equity, convertible arbitrage was employed as early as the 1950s.
Since then, convertible arbitrage has evolved into a sophisticated, model-intensive strategy, designed to capture the difference between the income earned by a convertible security (which is held long) and the dividend of the underlying stock (which is sold short). The resulting net positive income of the hedged position is independent of any market fluctuations. The trick is to assemble a portfolio wherein the long and short positions, responding to equity fluctuations, interest rate shifts, credit spreads and other market events offset each other.
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Hedge Fund Research (HFR) New York, offers the following description of the strategy
Convertible Arbitrage involves taking long positions in convertible securities and hedging those positions by selling short the underlying common stock. A manager will, in an effort to capitalize on relative pricing inefficiencies, purchase long positions in convertible securities, generally convertible bonds, convertible preferred stock or warrants, and hedge a portion of the equity risk by selling short the underlying common stock. Timing may be linked to a specific event relative to the underlying company, or a belief that a relative mispricing exists between the corresponding securities. Convertible securities and warrants are priced as a function of the price of the underlying stock, expected future volatility of returns, risk free interest rates, call provisions, supply and demand for specific issues and, in the case of convertible bonds, the issue-specific corporate/Treasury yield spread. Thus, there is ample room for relative mis-valuations.
Because a large part of this strategy’s gain is generated by cash flow, it is a relatively low-risk strategy.
The vast majority of physicians and medical professionals major in one of the hard science while in college; biology, engineering, chemistry, mathematics, computer science or physics; etc. Few take undergraduate courses in finance, business management, securities analysis, accounting or economics; although this paradigm is changing with modernity. These course are not particularly difficult for the pre-medical baccalaureate major, they are just not on the radar screen for time compressed and highly competitive students; nor are they needed for medical or nursing school admission, or the many related allied health professional schools.
In fact, William C. Roberts MD, originally from Emory University in Atlanta, and former editor for the Baylor University Medical Center Proceedings and The American Journal of Cardiology, opined just a decade ago:
“Of the 125 medical schools in the USA, only one of them to my knowledge offers a class related to saving or investing money.”
And so, it is important to review some basic principles of economics, finance and accounting as they relate to financial planning in thees two textbooks; and this ME-P.
Posted on April 12, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
THE “FIVE-FIVE” FINANCIAL RULE
By Staff Reporters
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Many of the pros of home ownership will appeal to medical retirees for whom their home is their castle and who appreciate being settled both financially and geographically:
1. Building equity in your home: Each mortgage payment you make brings you closer to owning your house free and clear with no payments. If you can buy a new home or condo outright by selling your current home, you can still build equity in your new home over time.
2. Predictability: If you have a fixed-rate mortgage, your mortgage payments will remain consistent for years and you don’t have to worry about a landlord ever making you move.
3. Tax benefits: You can deduct mortgage interest and property taxes up to certain limits.
4. Customization: You don’t need a landlord’s permission to alter and improve your home.
5. Home appreciation: Homes generally increase in value, so you can increase your net worth by owning a property.
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Renting also has five significant upsides, particularly for physician retirees who want greater freedom to travel and to make bigger moves — potentially across the country or even abroad:
1. Extreme flexibility: You can leave your property after giving notice and go wherever you want much more easily than with an illiquid home you’d have to sell first.
2. Lower upfront costs: You only have to pay first and last month’s rent and a security deposit to move into a rental, not make a large home down payment.
3. No maintenance concerns: If something breaks, your landlord is responsible for the cost of fixing it and the actual repairs. You don’t have to build up an emergency fund for maintenance.
4. Predictable expenses: For the duration of your lease, your monthly housing costs including utilities will remain consistent, even if the cost of energy goes up, for example.
5. Lack of worry: If you’re in a rental apartment, you won’t have to concern yourself with shoveling snow, mowing grass or other matters of upkeep.
Posted on April 12, 2025 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.
US stocks turned higher on Friday to cap a chaotic week on Wall Street, as investors weighed the latest tariff-related developments in the trade war between the US and China.
The S&P 500 (^GSPC) rose 1.8% after seesawing earlier in the session. The tech-heavy NASDAQ Composite (^IXIC) climbed 2.1%. The Dow Jones Industrial Average (^DJI) advanced 1.5%, about 600 points.
Posted on April 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters and Morning Brew
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Microsoft is celebrating its 50th birthday this week looking like a formerly washed up A-lister who’s suddenly rebounded and getting Oscar noms again.
Ever since Bill Gates and Paul Allen huddled in a garage in 1975 to start a company that’d define the experience of sitting in front of a boxy white PC monitor, Microsoft has had an uneven run. But after years of getting roasted for Internet Explorer, it now seems to be back on top—even briefly beating Apple as the world’s most valuable public company last year.
The tech giant can not only boast bonanza earnings, it also feels like a purveyor of the next big thing again, leading in the AI race through its partnership with OpenAI.
Windows washed
In the 1990s, it felt like Microsoft’s computer geeks were the overlords of tech. Windows powered most PCs, Internet Explorer became the go-to browser, and proficiency in Office tools became standard resume skills. But in the following decade, the company slept on internet tech and smartphones, ceding ground to Apple, Alphabet, and Meta.
It responded by going into midlife crisis mode, aka blowing cash on a series of questionable acquisitions to stay hip. That…didn’t help. By the 2010s, only grandparents could be reached @hotmail.com, Windows phones were a rarity, and no one used Bing as a verb.
When Gates stepped away from running the company in 2000, its new CEO Steve Ballmer grew its revenue threefold by the end of his tenure in 2013. He spearheaded Microsoft’s foray into gaming with the Xbox console and started its blockbuster cloud computing product Azure. But Microsoft’s profit growth slowed dramatically thanks to a massive cash bleed from its shopping spree.
It dropped $6.3 billion on the owner of ad tech platforms aQuantive to compete with Google’s ad business in 2007, only to write it off as a dud five years later.
The company burned at least $8 billion trying to make Windows phones a bigger force by buying Nokia’s cellphone division in 2014.
Microsoft paid $8.5 billion for Skype in 2011, which must’ve made it extra painful to announce that it was sunsetting the video calling service this winter.
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Cash-slinging comeback kid
When it blew out forty candles in 2015, the tech giant was looking past its prime. The stock was trading at around $35 a share, well below its $58 peak in 1999. Its net profit for the year was $12 billion. But investors who held on until now were rewarded with shares going for $374 on its birthday this week after the company reported a net profit of $88 billion in the last financial year.
Much of the revenue now comes from its Azure cloud computing business, which has been boosted by the booming AI industry ravenous for server power.
When Microsoft’s current CEO Satya Nadella stepped into the role in 2014, he doubled down on Azure to make Microsoft into a B2B behemoth selling computing power to tech companies.
It is now the world’s second largest cloud provider after Amazon Web Services, with a 21% market share, according to Synergy Research Group.
Microsoft also bought some businesses that didn’t fail, including LinkedIn—the thought leadership hub with a user base that has soared to 1 billion since the 2016 acquisition. It also owns GitHub, the leading code-sharing platform for software developers. And in its biggest purchase yet, it snagged gaming IP giant Activision Blizzard that owns Call of Duty and World of Warcraft for a whopping $68 billion in 2022, hoping to make itself a dominant caterer to the Xbox joystick-wielding crowd.
It’s an AI company now
The not-quite-acquisition that really got Microsoft its groundbreaker’s glitz back was pouring $13 billion into OpenAI.
Having gotten in on the ground floor of the AI boom, Microsoft is harnessing OpenAI’s models to power its CoPilot AI agent, which it embedded into its Office tools and Teams app. This pits it against other tech giants betting that AI agents automating tasks will be the biggest in-cubicle revolution since Excel.
Posted on April 11, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
Why would a doctor consider a Roth IRA conversion?
By Staff Reporters
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A Roth conversion involves transferring funds from a traditional retirement account—such as a 401(k), 403(b), or individual retirement account (IRA) funded with pre-tax dollars—into a Roth IRA.
The biggest benefit lies in the tax treatment of the converted funds. Once the funds are in the Roth IRA, future growth of those assets is tax-free. Withdrawals in retirement are also tax-free, assuming they meet certain criteria. As with any strategy, there are important considerations to keep in mind.
When you convert funds to a Roth IRA, the amount converted is taxable income in that tax year. For example, if you convert $100,000 from a traditional IRA to a Roth IRA, that $100,000 will be added to your taxable income in the conversion year.
Converting large amounts can result in a significant tax bill and may push you into a higher tax bracket. Even so, using retirement funds to pay taxes may make sense for those looking to convert large IRAs to reduce their future required minimum distributions (RMDs).
The timing of your Roth conversion matters too. Generally, it’s a good idea to convert when your income is lower—for example, after you’ve retired and before you begin drawing Social Security. You may also choose to convert over the course of several years to spread out the tax impacts. But if you can get comfortable with these considerations, a Roth conversion can provide you with benefits beyond tax-free growth and withdrawals.
Some of these benefits are:
Tax diversification. Having both traditional and Roth accounts allows you to manage your tax liability in retirement. For example, if your income in a given year is higher than expected, you can withdraw from the Roth IRA without increasing your taxable income.
No RMDs. Traditional IRAs and 401(k)s require you to begin taking RMDs at age 73. Roth IRAs have no RMD requirement during your lifetime. With a Roth account, you have more control over your retirement withdrawals and can leave the funds to grow for your heirs.
Benefits for heirs. Roth IRAs can be passed on to beneficiaries, who can inherit the account income tax-free. This means your heirs can enjoy the tax-free growth and withdrawals if the Roth IRA has been held for five years or more—a significant advantage, especially if your beneficiaries are in a higher tax bracket.
Financial Modeling is one of the most highly valued, but thinly understood, skills in financial analysis. The objective of financial modeling is to combine accounting, finance, and business metrics to create a forecast of a company’s future results.
According to Jeff Schmidt, a financial model is simply a spreadsheet, usually built in Microsoft Excel, that forecasts a business’s financial performance into the future. The forecast is typically based on the company’s historical performance and assumptions about the future and requires preparing an income statement, balance sheet, cash flow statement, and supporting schedules (known as a three-statement model, one of many types of approaches to financial statement modeling). From there, more advanced types of models can be built such as discounted cash flow analysis (DCF model), leveraged buyout (LBO), mergers and acquisitions (M&A), and sensitivity analysis
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DEFINED TERMS
Discounted Cash Flow (DCF): A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money. It’s like deciding whether a treasure chest is worth diving for now, based on the gold coins you’ll be able to cash in later.
Sensitivity Analysis: This involves changing one variable at a time to see how it affects an outcome. Imagine tweaking your coffee-to-water ratio each morning to achieve the perfect brew strength.
Budget – A budget is the amount of money a department, function, or business can spend in a given period of time. Usually, but not always, finance does this annually for the upcoming year.
Rolling Forecast – A rolling forecast maintains a consistent view over a period of time (often 12 months). When one period closes, finance adds one more period to the forecast.
Topside – A topside adjustment is an overlay to a forecast. This is typically completed by the corporate or headquarter team. As individual teams submit a forecast, the consolidated result might not make sense or align with expectations. When this occurs, the high-level teams use a topside adjustment to streamline or adjust the consolidated view.
Monte Carlo Simulation: Picture yourself at the casino, but instead of gambling your savings away, you’re using this technique to predict different outcomes of your business decisions based on random variables. It’s like playing financial roulette with the odds in your favor.
What-If Analysis: Ever daydream about what would happen if you took that leap of faith with your business? This tool allows you to explore various scenarios without risking a dime. It’s like trying on outfits in a virtual dressing room before making a purchase.
Leveraged Buyout (LBO) Model: This is a bit like orchestrating a heist, but legally. It’s about acquiring a company using borrowed money, with plans to pay off the debts with the company’s own cash flows. High stakes, high rewards.
Mergers and Acquisitions (M&A) Model: Picture two puzzle pieces coming together. This model evaluates how combining companies can create a new, more valuable entity. It’s the corporate version of a matchmaker.
Three Statement Model: The holy trinity of financial modeling, linking the income statement, balance sheet, and cash flow statement. It’s like weaving a tapestry where each thread is crucial to the overall picture.
Capital Asset Pricing Model (CAPM): A formula that calculates the expected return on an investment, considering its risk compared to the market. It’s like choosing the best roller coaster in the park, balancing thrill and safety.
Cash Flow Forecasting: This is your financial weather forecast, predicting the cash flow climate of your business. It helps you plan for sunny days and save for the rainy ones.
Cost of Capital: The price of financing your business, whether through debt or equity. It’s like the interest rate on your growth engine, pushing you to maximize every dollar invested.
Debt Schedule: A timeline of your business’s debts, showing when and how much you owe. It’s your roadmap to becoming debt-free, one milestone at a time.
Equity Valuation: Determining the value of a company’s shares. It’s like assessing the worth of a rare gemstone, ensuring investors pay a fair price for a piece of the treasure.
Financial Leverage: Using debt to amplify returns on investment. It’s like using a lever to lift a heavy object, increasing force but also risk.
Forecast Model: A crystal ball for your finances, projecting future performance based on past and present data. It’s your guide through the financial wilderness, helping you navigate with confidence.
Operating Model: A detailed blueprint of how a business generates value, mapping out operational activities and their financial impact. It’s like laying out the inner workings of a clock, ensuring every gear turns smoothly.
Revenue Growth Model: This tracks potential increases in sales over time, charting a course for expansion. It’s like plotting your ascent up a mountain, anticipating the effort required to reach the summit.
A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. These managers use a wide range of strategies, including leverage (borrowed money) and the trading of nontraditional assets, to earn above-average investment returns. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.
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The Hedge Fund manager I am considering is a Registered Investment Adviser [RIA]
QUESTION: What is a Registered Investment Advisor?
If the fund manager is an entity, then any individual you deal with will be a registered investment adviser representative. If the fund manager is an individual, then that individual is a registered investment adviser. In either case, the designation implies several steps have been taken.
In order to become a registered investment adviser, an individual must register for and pass the Series 65 Uniform Investment Adviser Law Exam, a three-hour, 130-question computer-based exam administered by the North American Securities Administrators Association. Topics covered include economics and analysis, investment vehicles, investment recommendations and strategies, and ethics and legal guidelines. A passing score is 70 percent or higher.
Once an individual has passed the Series 65, he or she must then apply via Form ADV to become a registered investment adviser. This application is made to either a state authority or to the SEC, depending on the adviser’s assets under management. If assets under management exceed $30 million, then the adviser must register with the SEC.
Form ADV consists of two parts. Part I provides general information to the regulatory authority. Part II is designed to be distributed to potential clients, and includes disclosure of a decent amount of information about the adviser. If the manager is a registered investment adviser, then you should expect to receive as part of the offering documentation either a current copy of Part II of the adviser’s Form ADV or a brochure that contains all the current information in Part II of Form ADV.
In addition to filing Form ADV and paying a small fee, the registered investment adviser becomes subject to extra administrative/regulatory burden as well as capital adequacy requirements that state the Adviser must maintain certain net worth levels.
By and large, because of the extra administrative burden as well as restrictions on certain activities, hedge fund managers attempt to avoid registering as investment advisers. Whether such managers can or cannot avoid such registration is largely dependent upon the state in which the manager operates. In California, for instance, hedge fund managers must register as investment advisers. In New York, such registration is not necessary. Not surprisingly, hedge fund managers located in California are rare, while they are quite plentiful in New York.
A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. These managers use a wide range of strategies, including leverage (borrowed money) and the trading of nontraditional assets, to earn above-average investment returns. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.
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My stock broker is telling me about a “wrap-fee” program involving a hedge fund manager.
QUESTION: What is a Wrap Fee?
A wrap fee program is a service that provides investment advice and portfolio management to clients for one all-inclusive fee. The fee pays for the services provided to the client, including but not limited to securities transactions, portfolio management, research, brokerage, and administrative services. Wrap fee programs also provide an understanding of a client’s financial goals and objectives; research and selection of assets; implementation of investment decisions; account statements, and access to real-time financial data.
The Investment Advisers Act of 1940 regulates investment advisors when they offer these wrap fee programs and requires them to provide comprehensive disclosure documents before investing. This act helps ensure clients have access to all important information that affects their investment decisions.
QUESTION: Why do I need my stock broker? Can I just go directly to the hedge fund manager?
Yes, you can, but you may find a different fee arrangement when you reach the hedge fund manager, and you may be participating in an unethical transaction. When hedge fund managers set up separate accounts for wrap-fee clients, they agree to take a set fee in exchange for managing this money. They also enter into agreements with one or more brokers to help market this aspect of their money management business. A portion of the wrap fee you pay goes to the broker, and a portion goes to the manager. Incentive compensation is not generally used.
When approached directly, hedge fund managers will typically offer only the hedge fund, complete with incentive compensation and pooled investment features. However, if the hedge fund manager is willing to set up a separate account, it is possible that the investor will find the set fee much less than what he or she would have paid in a wrap fee account through a broker.
Finally, the very large caveat to all this is that the ethics of a hedge fund manager who steals clients from brokers with whom he has a marketing relationship ought to be called into question. And when it comes to hedge funds, the ethics of the manager are of paramount importance.
Posted on April 3, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
BREAKING NEWS – MARKET VOLATILITY
By Staff Reporters
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US stocks nosedived on Thursday, with the Dow tumbling more than 1,200 points as President Trump’s surprisingly steep “Liberation Day” tariffs sent shock waves through markets worldwide. The tech-heavy NASDAQ Composite (IXIC) led the sell-off, plummeting over 4%. The S&P 500 (GSPC) dove 3.7%, while the Dow Jones Industrial Average (^DJI) tumbled roughly 3%. [ongoing story].
So, does the traditional 60 stock / 40 bond strategy still work or do we need another portfolio model?
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The 60/40 strategy evolved out of American economist Harry Markowitz’s groundbreaking 1950s work on modern portfolio theory, which holds that investors should diversify their holdings with a mix of high-risk, high-return assets and low-risk, low-return assets based on their individual circumstances.
While a portfolio with a mix of 40% bonds and 60% equities may bring lower returns than all-stock holdings, the diversification generally brings lower variance in the returns—meaning more reliability—as long as there isn’t a strong correlation between stock and bond returns (ideally the correlation is negative, with bond returns rising while stock returns fall).
For 60/40 to work, bonds must be less volatile than stocks and economic growth and inflation have to move up and down in tandem. Typically, the same economic growth that powers rallies in equities also pushes up inflation—and bond returns down. Conversely, in a recession stocks drop and inflation is low, pushing up bond prices.
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But, the traditional 60/40 portfolio may “no longer fully represent true diversification,” BlackRock CEO Larry Fink writes in a new letter to investors.
Instead, the “future standard portfolio” may move toward 50/30/20 with stocks, bonds and private assets like real estate, infrastructure and private credit, Fink writes.
Here’s what experts say individual investors may want to consider before dabbling in private investments.
It may be time to rethink the traditional 60/40 investment portfolio, according to BlackRock CEO Larry Fink. In a new letter to investors, Fink writes the traditional allocation comprised of 60% stocks and 40% bonds that dates back to the 1950s “may no longer fully represent true diversification.“
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
Posted on April 2, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Ann Miller RN MHA CPHQ CMP™
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Finally … Fiduciary second investing and financial planning opinions right here!
Telephonic or electronic advice for medical professionals that is:
Objective, affordable, medically focused and financially personalized
Rendered by a pre-screened financial consultant for doctors and medical professionals
Offered on a pay-as-you-go basis, by phone or secure e-mail transmission
The iMBA Discussion Forum™ is a physician-to-financial advisor telephone or e-mail portal that connects independent financial professionals to doctors, nurses or healthcare executives desiring affordable and unbiased financial planning advice.
Medical professionals and healthcare executives can now receive direct access to pre-screened iMBA professionals in the areas of Investing, Financial Planning, Asset Allocation, Portfolio Management, Insurance, Mortgage and Lending, Human Resources, Retirement Planning and Employee Benefits. To assist our medical professional and healthcare executive members, we can be contracted with per-minute or per-project fees, and contacted by client phone, email or secure instant messaging.
A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. These managers use a wide range of strategies, including leverage (borrowed money) and the trading of nontraditional assets, to earn above-average investment returns. A hedge fund investment is often considered a risky, alternative investment choice and usually requires a high minimum investment or net worth. Hedge funds typically target wealthy investors.
QUESTION:Can I invest my Individual Retirement Account [IRA] in a Hedge Fund?
This is up to the manager, but there is no legal restriction on a hedge fund accepting individual retirement account (IRA) assets. IRA accounts are not well suited for funds that make extensive use of leverage, however. In such cases, the fund is likely to generate significant amounts of unrelated business taxable income (UBTI) – profits of the fund attributable to the use of leverage. The holder of an IRA account must pay taxes on UBTI, even if the UBTI was generated in an IRA account.
But, today’s hedge funds may or may not use leverage. Many hedge funds are not hedged at all, but rather are just specialized versions of regular long stock portfolios. If such funds do not use much leverage, IRA investors will not encounter much difficulty with UBTI and should not hesitate in considering these funds.
In considering whether to accept IRA money, hedge fund managers must consider several factors. If the only type of retirement money accepted by the hedge funds is IRA money, then the manager has no limit on how much retirement money the fund can accept. If, however, there are other types of retirement money invested in the fund, such as pension funds, IRA money will be counted towards a total of 25 percent of fund assets that can be invested in retirement accounts before the fund becomes subject to the Employment Retirement Income Security Act of 1974 (ERISA). Funds subject to ERISA regulations face a heavy administrative burden and more restrictions than most fund managers like.
Finally, IRA distributions from a hedge fund are subject to the standard 20 percent withholding unless the funds are directly rolled over to other qualified plans.
*** Several years ago we noted that far too many mid-career, mature and physician clients using traditional stock brokers, management consultants and “financial advisors”, seemed to be less successful than those who went it alone. These Do-it-Yourselfers [DIYs] had setbacks and made mistakes, for sure. But, the ME Inc,. doctors seemed to learn from their mistakes and did not incur the high management and service fees demanded from general or retail one-size-fits-all “advisors.”
In fact, an informal inverse related relationship was noted, and dubbed the “Doctor Effect.” In other words, the more consultants an individual doctor retained; the less well they did in all disciplines of the financial planning, professional portfolio and investing continuum.
Of course, the reason for this discrepancy eluded many of them as Wall Street brokerages and wire-houses flooded the media with messages, infomercials, print, radio, TV, texts, tweets, and internet ads to the contrary. Rather than self-learn the basics, the prevailing sentiment seemed to purse the holy grail of finding the “perfect financial advisor.” This realization was a confirmation of the industry culture which seemed to be: Bread for the advisor – Crumbs for the client!
And so, we at the the Institute of Medical Business Advisors Inc. (iMBA), and this Medical Executive-Post, formed a cadre’ of technology focused and highly educated doctors, financial advisors, attorneys, accountants, psychologists and educational visionaries who decided there must be a better way for their healthcare colleagues to receive financial planning advice, products and related management services within a culture of fiduciary responsibility.
We trust you agree with this ME Inc philosophy as illustrated in this free white paper available upon request.
PROFESSIONAL PORTFOLIO CONSTRUCTION [Investing Assets and their Management] Subscribe, Read, Like and Refer
Email whiote paper request here:MarcinkoAdvisors@outlook.com
Posted on March 26, 2025 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.
Donald Trump has officially dropped a stablecoin. It’s called USD1, and it’s pegged 1:1 with the US dollar, according to a statement from his family company World Liberty Financial Inc, (WLFI) today. The company says the token is fully backed by short-term US government treasuries, USD deposits, and other cash equivalents. Every token equals one dollar, no exceptions. WLFI says it built the whole thing to give people a stablecoin they don’t have to second guess.
US stocks rose for a third day in a row despite souring consumer confidence — and as investors weighed whether President Trump would temper his plans for upcoming tariffs.
The benchmark S&P 500 (^GSPC) rose more than 0.1%, while the Dow Jones Industrial Average (^DJI) ticked just above the flatline. The tech-heavy NASDAQ Composite (^IXIC) rose nearly 0.5%, bolstered by a more than 3% jump from Tesla (TSLA).
Absolute Return – the goal is to have a positive return, regardless of market direction. An absolute return strategy is not managed relative to a market index.
Accredited Investor – wealthy individual or well-capitalized institutions covered under Regulation D of the Securities Act of 1933.
Alpha – the return to a portfolio over and above that of an appropriate benchmark portfolio (the manager’s “value added”).
Arbitrage – any strategy that invests long in an asset, and short in a related asset, hoping the prices will converge.
Attribution – the process of “attributing” returns to their sources. For example, did the returns to a portfolio (over and above some benchmark) come from stock selection, industry/sector over- or under-weighting or factor weighting. Software programs are helpful in reporting an attribution.
Beta – a measure of systematic (i.e., non-diversifiable) risk. The goal is to quantify how much systematic risk is being taken by the fund manager vis-à-vis different risk factors, so that one can estimate the alpha or value-added on a risk-adjusted basis.
Correlation – a measure of how strategy returns move with one another, in a range of –1 to +1. A correlation of –1 implies that the strategies move in opposite directions. In constructing a portfolio of hedge funds, one usually wants to combine a number of non-correlated strategies (with decent expected returns) to be well diversified.
Drawdown – the percentage loss from a fund’s highest value to its lowest, over a particular time frame. A fund’s “maximum drawdown” is often looked at as a measure of potential risk.
Hurdle Rate – the return where the manager begins to earn incentive fees. If the hurdle rate is 5% and the fund earns 15% for the year, then incentive fees are applied to the 10% difference.
Leverage – one uses leverage if he borrows money to increase his position in a security. If one uses leverage and makes good investment decisions, leverage can magnify the gain. However, it can also magnify a loss.
Opportunistic – a general term that describes an aggressive strategy with a goal of making money (as opposed to holding on to the money one already has).
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Pairs Trading – usually refers to a long/short strategy where one stock is bought long, and a similar stock is sold short, often within the same industry. Buying the stock of Home Depot and shorting Lowe’s in an equal amount would be an example.
Portfolio Simulation – involves testing an investment strategy by “simulating” it with a database and analytic software. Often referred to as “backtesting” a strategy. The simulated returns of the strategy are compared to those of a benchmark over a specific time frame to see if it can beat that benchmark.
Sharpe Ratio – a measure of risk-adjusted return, computed by dividing a fund’s return over the risk-free rate by the standard deviation of returns. The idea is to understand how much risk was undertaken to generate the alpha.
Short Rebate – if you borrow stock and then sell it short, you have cash in your account. The short rebate is the interest earned on that cash.
R-Squared – a measure of how closely a portfolio’s performance varies with the performance of a benchmark, and thus a measure of what portion of its performance can be explained by the performance of the overall market or index. Hedge fund investors want to know how much performance can be explained by market exposure versus manager skill.
Transportable Alpha – the alpha of one active strategy can be combined with another asset class. For example, an equity market-neutral strategy’s value-added can be “transported” to a fixed income asset class by simply buying a fixed income futures contract. The total return comes from both sources.
Value at Risk – a technique which uses the statistical analysis of historical market trends and volatilities to estimate the likelihood that a specific portfolio’s losses will exceed a certain amount.
SO – HOW MUCH IS A “FINANCIAL ADVISOR” REALLY WORTH?
This blog holds a rather uncomplimentary opinion of financial advisors, and the financial services and brokerage industry as a whole; deserved, or not? The entire site hints at this attitude as well, in favor of a going it alone or ME, Inc investing when possible. Nevertheless, it is reasonable to wonder how much boost in net-returns might an educated and informed, fee transparent and honest, fiduciary focused “financial advisor” add to a clients’ investment portfolio; all things being equal [ceteris paribus].
And, can it be quantified?
Well, according to Vanguard Brokerage Services®, perhaps as much as 3%? In a decade long paper from the Valley Forge, PA based mutual fund and ETF giant, Vanguard said financial advisors can generate returns through a framework focused on five wealth management principles:
• Being an effective behavioral coach: Helping clients maintain a long-term perspective and a disciplined approach is arguably one of the most important elements of financial advice. (Potential value added: up to 1.50%).
• Applying an asset location strategy: The allocation of assets between taxable and tax-advantaged accounts is one tool an advisor can employ that can add value each year. (Potential value added: from 0% to 0.75%).
• Employing cost-effective investments: This component of every advisor’s tool kit is based on simple math: Gross return less costs equals net return. (Potential value added: up to 0.45%).
• Maintaining the proper allocation through rebalancing: Over time, as investments produce various returns, a portfolio will likely drift from its target allocation. An advisor can add value by ensuring the portfolio’s risk/return characteristics stay consistent with a client’s preferences. (Potential value added: up to 0.35%).
• Implementing a spending strategy: As the retiree population grows, an advisor can help clients make important decisions about how to spend from their portfolios. (Potential value added: up to 0.70%).
Source: Financial Advisor Magazine, page 20, April 2014.
Assessment
However, Vanguard notes that while it’s possible all of these principles could add up to 3% in net returns for clients, it’s more likely to be an intermittent number than an annual one because some of the best opportunities to add value happen during extreme market lows and highs when angst or giddiness [fear and greed] can cause investors to bail on their well-thought-out investment plans.
And, is the study applicable to doctors and allied healthcare providers? Doe Vanguard have a vested interest in the topic. What about fee based versus fee-only financial advice?
Conclusion
Finally, recognize the plethora of other financial planning life-cycle topics addressed in this ME-P were not included in the Vanguard investment portfolio-only study a decade ago.
And what about today with contemporaneous internet advising, chat-rooms, linkedin, robo-advisors, reddit and the like?
Posted on March 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
BANK IDENTIFICATION NUMBER – DEFINED
By Staff Reporters
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What Is a BIN Attack?
The BIN, or the Bank Identification Number, is the first six digits on a credit card. These are always tied to its issuing institution – usually a bank. In a BIN attack, fraudsters use these six numbers to algorithmically try to generate all the other legitimate numbers, in the hopes of generating a usable card number.
How Does a BIN Attack Work?
Fraudsters conduct BIN attacks by generating hundreds of thousands of possible credit card numbers and testing them out.
A fraudster looks up the BIN of the bank they will target. Ranging from four to six digits, this information is in the public domain and is thus easy to source.
Using dedicated software such as an auto-dialer, they generate thousands, often tens of thousands, combinations of possible existing card numbers by this issuer.
At this point, these credentials need to be tested. The fraudster identifies a suitable online shop or donation page.
They start card testing by attempting a small payment with each generated card number.
They keep track of the small percentage of card details that worked, which they are ready to use in earnest for their fraudulent pursuits.
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Remember that the fraudster will start off with only six digits, yet there are many more card details required for a successful transaction. If those are entered erroneously, the transaction will decline. This includes the CVV number, the expiration date, as well as likely address verification service (AVS) failures. Card testing transactions are executed remotely in a fast fashion, so distance checks should also be a hint as well as velocity alerts.
Fraudsters may use bad merchant accounts directly for this purpose, or more frequently involve multiple online stores and services during a BIN attack, as their attempts keep getting blocked at most outlets.
Posted on March 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
The Power of Attorney Mistake That Could Cost You Everything
By Rick Kahler CFP®
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Recently, reading a training manual on elder abuse, I was reminded of a financial risk that is often overlooked. One of the fastest and easiest ways to unravel your financial security is to have the wrong person gain control of your money.
The example in the manual mirrored a heartbreaking situation I once experienced with a long-term client. As her mental and physical health declined, this single woman moved into assisted living. Her newly designated power of attorney, a relative from out of town, took control of her financial affairs.
Almost immediately, without consulting us, the relative began making large withdrawals, closed her accounts, and transferred funds elsewhere. They challenged the financial plan, investments, and strategies we had established to safeguard the client’s financial security and provide for her long-term care. Even though their actions threatened the client’s wellbeing, we were powerless to stop them. Our only recourse was to report the behavior to the authorities.
This heartbreaking and frustrating experience underscored just how critical it is to be mindful when executing a Power of Attorney. Besides designating someone you trust, it is wise to build in safeguards to prevent even a well-meaning relative from inadvertently derailing a carefully constructed financial plan.
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One such safeguard is to include a financial advisor in your POA—as long as that person is a fee-only, fiduciary advisor with an obligation to act in your best interests. In many cases, advisors are hesitant to suggest this option because they are sensitive to the potential conflict of interest and do not want to appear self-serving. An unfortunate reality is that you should be cautious if an advisor, particularly one who sells products on commission, seems eager to be added to your POA.
Including your financial advisor in your POA does not mean you designate them as your agent to manage your affairs. Instead, you include a clause naming them as the professional of record you want your designated agent to continue working with. This creates continuity and accountability. It prevents your agent from replacing your advisor with someone who may be unfamiliar with your needs and goals, unqualified, or untrustworthy.
Your advisor might also recommend adding a secondary safeguard, such as naming an attorney or accountant to oversee the selection of a successor advisor in case your current advisor is unable to continue. This additional layer of protection ensures that the financial professionals guiding your portfolio remain aligned with your best interests. Taking these extra steps can save you—and your loved ones—from significant financial stress down the road.
Including safeguards in your POA is not about mistrusting your loved ones, but about equipping them with the right resources and support to act in your best interest. Financial management is complex, and it requires expertise that most people, even those with the best intentions, may not possess.
One of the hardest parts about planning for diminished financial capacity is the emotional aspect. No one likes to imagine a time when they might not be able to manage their own money. But in reality, taking steps now to protect your financial future is the ultimate act of control. It can help ensure that your wishes are respected and the financial foundation you’ve worked so hard to build remains intact.
Remember, too, that avoiding conversations often increases financial vulnerability. If you don’t have a POA or aren’t comfortable with what you do have, now is the time to bring it up with your advisor, attorney, or a trusted family member. These safeguards are about protecting yourself. They also support those you will rely on to care for you and your financial legacy,
Posted on March 16, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Vitaliy Katsenelson CFA
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Today, I’m going to share stories about my best and worst investment decisions. But don’t worry, this isn’t just a brag-and-cringe session about making or losing money. These stories are about the valuable lessons learned, and how these adventures in investing helped shape my current approach.
The Best Investment Decision
In investing, you don’t get extra points for creativity or difficulty. A million dollars earned while you are smiling buys as many potatoes as a million dollars that cost you your marriage and hair.
However, from a personal, creative satisfaction perspective, our investment in Uber was one of our best. That’s not to say that it has been the most successful decision from a financial perspective, at least not yet.
Uber doesn’t fit into the traditional value stock category. Until 2023, the third year of our ownership, it never made money. It was a stock everyone hated. After we bought it, I had clients reach out to me asking if I had been kidnapped and someone else was making these purchases of Uber.
We bought more shares very opportunistically during and after the pandemic. I wrote a long research report on it, which you can read here.
On one hand, Uber’s switchboard is a digital business, but the company also has a physical presence in thousands of cities, which incurs costs (the analog side of the business). Additionally, the availability of cheap money caused the ride-share market to go crazy and act rationally irrational, as competitors jostled in a land grab.
My thesis consisted of several insights:
Unlike traditional-tech, digital-only companies, Uber is a hybrid, both digital and analog. Thus, its cost structure is much higher than that of other companies. This, in part, explains the higher losses.
It has a strong brand; its name has become a verb.
The rideshare market is inevitable and will only continue to grow. Uber is not just in competition with taxis, second cars, or seldomly used cars; it is also in competition with the favors we ask of friends and relatives, such as dropping us off at the mechanic or picking us up from the doctor’s office.
Uber has global scale, which its competitors lack, allowing it to spread R&D across more markets.
As its revenue grows, each incremental dollar comes with a very high margin, which directly drops to the bottom line. Therefore, at some point, its earnings will explode to the upside as fixed costs stop growing, allowing it to scale.
The Uber story is not over; we still own the stock. I don’t want to do a celebratory dance. But this idea came with a lot of creative satisfaction. There is another point of pride here. Despite our very tumultuous ownership of this stock, we remained rational (I have written about that here). We bought more when it became extremely undervalued, and I would be lying if I said that was psychologically easy – it was not, but we followed our research and process.
The Worst Investment Decision
My worst investments that resulted in losses had several things in common: They were low-quality companies; their financials were complex and not transparent (for instance, one-time items were labeled as “one-time” every quarter); and they had questionable management.
However, they were all considered “cheap”… until they were not. Now, I hope you see why I am dogmatic about quality.
However.
When you are wrong on an investment and you lose money, the most you can lose is 100%. I have learned a lot from those. But they were not my worst investments. Those were the ones where I left 300–400% on the table when I sold too soon. Let me detail two examples.
EA – Electronic Arts
We bought EA in the early 2010s. I wrote about it – you can read my investment case for it here. To sum up, games were moving from being sold in stores to being digital downloads, which would lead to higher margins (don’t have to pay for packaging and Best Buy to sell them). The market for games was exploding, as every adult and teenager had a gaming device in their hands – a smartphone. The market for video games was going to be much larger. EA was the largest player in that space, with great franchises.
The following two years of ownership were very painful. EA had a few big game flops, and the market did not care about improving fundamentals. The stock kept declining. We continued to buy more. Every time we bought more shares, the stock fell further. Fast-forward a year or two. The stock doubled from our original purchase, but I was mentally exhausted. I did a celebratory dance and sold the stock. The stock then went up another 4x within a few years after we sold it. It went up for the right reasons – its earnings exploded to the upside, in line with my original thesis.
The sale was a mistake, not because the price went up but because I let frustration over the stock-price decline (volatility) get to me. Investing is a mental game. I learned from this adventure that it is important to zoom out and not obsess over individual stocks in the portfolio. This is why we have a portfolio. It was a very costly but educational mistake. Our ownership of Uber was not a walk in the park, either – just look at the stock price over the last few years. But I had learned my lesson from EA and was able to do the analysis, update our model, and zoom out.
In investing, there is a big difference between intellectual and tactile knowledge. I am going to go PG-13 on you for a second and quote the irascible Charlie Munger: “Learning about investing through a model portfolio is like learning about sex through romantic novels.” A big part of investing is observing yourself as an investor – your thoughts and emotions as you ride the actual rollercoaster of owning a stock.
I also made an important modification to our process.
We always value every company in the portfolio on earnings (free cash flows) at least four years out. Why four years? Three seems too short. There is no magic in this number, other than it being longer than most analyst estimates. We do this for all stocks in the portfolio, and then the total return for each is calculated and annualized. If a company has strong growth potential, it may appear to be expensive based on current earnings; but in reality, it may actually be cheap based on earnings projected four years from now.
On the other side of the spectrum, a company that has no growth or dividends may seem “cheap” based on its current earnings multiple, but this cheapness may quickly dissipate once a total return is calculated using future earnings. Time is on the side of growing businesses and the enemy of the ones that stand still. Therefore, a non-growing or slow-growing business needs a much greater discount (margin of safety) to secure a spot in our portfolio.
I want to stress another point. We sometimes sell a stock and then it goes higher. If we sold it for the right fundamental reasons, this doesn’t bother me. There is very little to learn.
Twilio
I’ll give you another crazy example. We bought Twilio at $25 in 2017 or so. Our thesis was that they had built the largest digital telecommunications network, which gave them a brief competitive advantage. They were also spending 5x more on R&D than competitors to build applications around this network, which would give them long-term advantages.
The stock price went up to $60 in a few months without anything significantly changing, so we sold a third of our position. Then it went up to $90, and we sold some more. To our disbelief, we sold the rest at around $120, a bit before the pandemic.
During the pandemic, Twilio’s price hit $400. I had zero regret about not holding on to the shares. Absolutely none. Twilio’s profitability did not match the stock market’s opinion of its price. Twilio’s stock price was as crazy to me at $250 as it was at $300 or $400. After reviewing our models, we concluded that even $120 was at the extreme end of our optimistic assumptions. Fast-forward to today, where the stock is at $60 or so. We are currently sharpening our pencils, but we have not bought the stock – yet.
Selling EA was a mistake; selling Twilio was not.
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Key takeaways
My “best investment decision” with Uber wasn’t just about financial gains, but the creative satisfaction it brought. It taught me the value of sticking to our research and process, even when it’s psychologically challenging.
The worst investments often share common traits: low-quality companies, complex financials, questionable management, and the illusion of being “cheap.” This reinforces my dogmatic stance on prioritizing quality.
Sometimes, the costliest mistakes aren’t the ones where you lose money, but those where you leave significant gains on the table by selling too soon. My experience with EA taught me this lesson the hard way.
There’s a crucial difference between intellectual and tactile knowledge in investing. Actually owning stocks and experiencing the emotional roller coaster is invaluable for developing as an investor.
Selling a stock that later increases in value isn’t always a mistake if the decision was based on sound fundamental reasons. My experience with Twilio illustrates this point – sometimes it’s right to sell even if the price continues to climb.
NOTE:Please read the following important disclosure here.
According to Patricia Salber MD [personal communication], there are a number of reasons why direct patient access to laboratory medical results is a good idea:
Between 8 and 26% of abnormal test results, including those suspicious for cancer, are not followed up in a timely manner. Direct access could help reduce the number of times this occurs
Self-management, particularly of chronic illness has known benefits. Just like the QS people, many folks with chronic illness obtain and manage to self-acquired lab results every day via gluco-meters, home pulmonary function tests, blood pressure measurements, and so forth. Direct access to laboratory-acquired data, one could argue is a continuation of that personal responsibility
Patients want to be notified about their results in what they perceive as a timely fashion. In one study, patients who received direct notification of their bone density tests results were more likely to perceive they had timely notification compared to usual care even though there was no measurable effect on actual treatment received after three months
Being more responsible for test results could encourage consumers to try to learn more about the meaning of the test results, conceivably increasing their health literacy.
But, the arguments against direct access discussed include the following:
Patients prefer their physicians contact them directly when they have abnormal test results, although the major studies published in 2005 and 2009, preceded the extraordinary use of the internet to access health information that exists today.
There is concern over whether patients will know what to do when they receive the results – will they make erroneous interpretations or fail to contact their docs? This could be, but the intent of the proposed rule is shared access to the results. We suspect if the rule become law, docs will develop better notification mechanisms so that they reach the patient before the patient directly accesses the results or lab companies will design better lab test notifications with easy-to-understand interpretations or a whole new industry will appear that can provide instantly available individualized lab interpretation…or maybe all three of these would happen and that would be a very good thing.
Unknown impact of dual notification (doctors and patients) of lab test results on physician behavior…would docs simply shift responsibility for initiating follow-up care from themselves to their patients?
Would direct access of life-changing lab tests, such as HIV or malignancy, lead to unnecessary patient anxiety – or worse? (Conversely, is there less anxiety, desperation, or suicidal ideation if the bad news is delivered face to face?
Individuals likely may contact their physicians immediately after getting the lab results asking for a telephonic or face-to-face interpretation … it is not known how this would impact physician workload and/or potential for reimbursement [personal communication, Richard Hudson DO, Atlanta, GA].
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com
Posted on March 13, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters and IRS
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Straddles: A straddle is any set of offsetting positions on personal property. For example, a straddle may consist of a purchased option to buy and a purchased option to sell on the same number of shares of the security, with the same exercise price and period.
Personal property.
This is any actively traded property. It includes stock options and contracts to buy stock but generally does not include stock.
Straddle rules for stock.
Although stock is generally excluded from the definition of personal property when applying the straddle rules, it is included in the following two situations.
The stock is of a type that is actively traded, and at least one of the offsetting positions is a position on that stock or substantially similar or related property.
The stock is in a corporation formed or availed of to take positions in personal property that offset positions taken by any shareholder.
Note
For positions established before October 22, 2004, condition 1 above does not apply. Instead, personal property includes stock if condition 2 above applies or the stock was part of a straddle in which at least one of the offsetting positions was:
An option to buy or sell the stock or substantially identical stock or securities,
A securities futures contract on the stock or substantially identical stock or securities, or
A position on substantially similar or related property (other than stock).
Position
A position is an interest in personal property. A position can be a forward or futures contract or an option.
An interest in a loan denominated in a foreign currency is treated as a position in that currency. For the straddle rules, foreign currency for which there is an active inter bank market is considered to be actively traded personal property.
Offsetting position
This is a position that substantially reduces any risk of loss you may have from holding another position. However, if a position is part of a straddle that is not an identified straddle, do not treat it as offsetting to a position that is part of an identified straddle.
Presumed offsetting positions
Two or more positions will be presumed to be offsetting if:
The positions are established in the same personal property (or in a contract for this property), and the value of one or more positions varies inversely with the value of one or more of the other positions;
The positions are in the same personal property, even if this property is in a substantially changed form, and the positions’ values vary inversely as described in the first condition;
The positions are in debt instruments with a similar maturity, and the positions’ values vary inversely as described in the first condition;
The positions are sold or marketed as offsetting positions, whether or not the positions are called a straddle, spread, butterfly, or any similar name; or
The aggregate margin requirement for the positions is lower than the sum of the margin requirements for each position if held separately.
Related persons
To determine if two or more positions are offsetting, you will be treated as holding any position your spouse holds during the same period. If you take into account part or all of the gain or loss for a position held by a flow-through entity, such as a partnership or trust, you are also considered to hold that position.
Some Stupid Things Financial Advisors Say to Physician Clients
A few years ago and just for giggles, colleague Lon Jefferies MBA CFP® and I collected a list of dumb-stupid things said by some Financial Advisors to their doctor, dentist, nurse and and other medical professional clients, along with some recommended under-breath rejoinders:
“They don’t have any debt except for a mortgage and student loans.” OK. And I’m vegan except for bacon-wrapped steak.
“Earnings were positive before one-time charges.” This is Wall Street’s equivalent of, “Other than that Mrs. Lincoln; how was the play?”
“Earnings missed estimates.” No. Earnings don’t miss estimates; estimates miss earnings. No one ever says “the weather missed estimates.” They blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.
“Earnings met expectations, but analysts were looking for a beat.” If you’re expecting earnings to beat expectations, you don’t know what the word “expectations” means.
“It’s a Ponzi scheme.” The number of things called Ponzi schemes that are actually Ponzi schemes rounds to zero. It’s become a synonym for “thing I disagree with.”
“The [thing not going perfectly] crisis.” Boy who cried wolf, meet analyst who called crisis.
“He predicted the market crash in 2008.” He also predicted a crash in 2006, 2004, 2003, 2001, 1998, 1997, 1995, 1992, 1989, 1984, 1971…
“More buyers than sellers.” This is the equivalent of saying someone has more mothers than fathers. There’s one buyer and one seller for every trade. Every single one.
“Stocks suffer their biggest drop since September.” You know September was only six weeks ago, right?
“We’re cautiously optimistic.” You’re also an oxymoron.
[Guy on TV]: “It’s time to [buy/sell] stocks.” Who is this advice for? A 20-year-old with 60 years of investing in front of him, or a 82-year-old widow who needs money for a nursing home? Doesn’t that make a difference?
“We’re neutral on this stock.” Stop it. You don’t deserve a paycheck for that.
“There’s minimal downside on this stock.” Some lessons have to be learned the hard way.
“We’re trying to maximize returns and minimize risks.” Unlike everyone else, who are just dying to set their money ablaze!
“Shares fell after the company lowered guidance.” Guys, they just proved their guidance can be wrong. Why are you taking this new one seriously?
“Our bullish case is conservative.” Then it’s not a bullish case. It’s a conservative case. Those words mean opposite things.
“We look where others don’t.” This is said by so many investors that it has to be untrue most of the time.
“Is [X] the next black swan?” Nassim Taleb’s blood pressure rises every time someone says this. You can’t predict black swans. That’s what makes them dangerous.
“We’re waiting for more certainty.” Good call. Like in 1929, 1999 and 2007, when everyone knew exactly what the future looked like. Can’t wait!
“The Dow is down 50 points as investors react to news of [X].” Stop it – you’re just making stuff up. “Stocks are down and no one knows why” is the only honest headline in this category.
“Investment guru [insert name] says stocks are [insert forecast].” Go to Morningstar.com. Look up that guru’s track record against their benchmark. More often than not, their career performance lags an index fund. Stop calling them gurus.
“We’re constructive on the market.” I have no idea what that means. I don’t think you do, either.
“[Noun] [verb] bubble.” (That’s a sarcastic observation from investor Eddy Elfenbein.)
“Investors are fleeing the market.” Every stock is owned by someone all the time.
“We expect more volatility.” There has never been a time when this was not the case. Let me guess, you also expect more winters?
“This is a strong buy.” What do I do with this? Click the mouse harder when placing the order in my brokerage account?
“He was tired of throwing his money away renting, so he bought a house.” He knows a mortgage is renting money from a bank, right?
“This is a cyclical bull market in a secular bear.” Vapid nonsense.
“Will Obamacare ruin the economy?” No. And get a grip.
So, don’t let these aphorisms blind you to the critical thinking skills you learned in college, honed in medical school and apply every day in life.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com
Posted on March 11, 2025 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.
US stocks plunged on Monday as investors processed growing concerns about the health of the US economy after President Trump and his top economic officials acknowledged the possibility of a potential rough patch.
The Dow Jones Industrial Average (^DJI) fell nearly 900 points, or over 2%, while the benchmark S&P 500 (^GSPC) dropped around 2.7% after the index posted its worst week since September. The tech-heavy NASDAQ Composite (^IXIC) fell 4% in its worst day since 2022, as the “Magnificent Seven” stocks led the sell-off. Tesla’s (TSLA) rout continued, plunging 15% and officially wiping out the gains it had made in the wake of Trump’s election win. Nvidia (NVDA), Apple (AAPL), Google parent Alphabet (GOOG), and Meta (META) all each lost more than 4%.
Key inflation data includes the Consumer Price Index (CPI) and Producer Price Index (PPI) on Wednesday and Thursday could help set the tone, though economic growth concerns seem to have replaced inflation as the prime concern. The S&P 500 index (SPX) dropped more than 3% last week, the worst performance since September.
However, the U.S. economy “is in a good place” despite recent policy uncertainty, Federal Reserve Chairman Jerome Powell said Friday. He sees no need to hurry rate cuts until there’s more policy clarity, Bloomberg reported. Stocks rallied on Powell’s words late Friday, but Monday’s early action indicates that rallies continue being sold, and the Cboe Volatility Index (VIX) rose above 26 as investors piled into risk-off assets like bonds. The 200-day moving average of 5,734 for the SPX remains a key technical support area, and the SPX was on pace to open below that Monday, now more than 6% off of all-time highs but not yet in –10% correction territory.
I was having lunch with a close friend of mine. He mentioned that he had accumulated a significant sum of money and did not know what to do with it. It was sitting in bonds, and inflation was eating its purchasing power at a very rapid rate.
He is a dentist and had originally thought about expanding his business, but a shortage of labor and surging wages turned expanding into a risky and low-return investment. He complained that the stock market was extremely expensive. I agreed.*
He said that the only thing left was residential real estate. I pushed back. “What do you think will happen to the affordability of houses if – and most likely when – interest rates go up? Inflation is now 6%. I don’t know where it will be in a year or two, but what if it becomes a staple of the economy? Interest rates will not be where they are today. Even at 5% interest rates [I know, a number unimaginable today] houses become unaffordable to a significant portion of the population. Yes, borrowers’ incomes will be higher in nominal terms, but the impact of the doubling of interest rates on the cost of mortgages will be devastating to affordability.”
He rejoined, “But look at what happened to housing over the last twenty years. Housing prices have consistently increased, even despite the financial crisis.”
I agreed, but I qualified his statement: “Over the past twenty, actually thirty, years interest rates declined. I honestly don’t know where interest rates will be in the future. But probabilistically, knowing what we know now, the chances that they are going to be higher, much higher, are more likely than their staying low. Especially if you think that inflation will persist.”
We quickly shifted our conversation toward more meaningful topics, like kids.
It seems that every year I think we have finally reached the peak of crazy, only to be proven wrong the next year. The stock market and thus index funds, just like real estate, have only gone one way – up. Index funds became the blunt instrument of choice in an always-rising market. So far, this choice has paid off nicely.
The market is the most expensive it has ever been, and thus future returns of the market and index funds will be unexciting. (I am being gentle here.)
You don’t have to be a stock market junkie to notice the pervasive feeling of euphoria. But euphoria is a temporary, not a permanent emotion; and at least when it comes to the stock market, it is usually supplanted by despair. Market appreciation that was driven by expanding valuations was not a gift but a loan – the type of loan that must always be paid back with a high rate of interest.
I don’t know what straw will break the feeble back of this market or what will cause the music to stop (there, you got two analogies for the price of none). We are in an environment where there are very few good options. If you do nothing, your savings will be eaten away by inflation. If you do something, you find that most assets, including the stock market as a whole, are incredibly overvalued.
We are doing the only sensible thing that you can do today. We spend very little time thinking about straws or what will cause the music to stop or how overvalued the market is. We are focusing all our energy on patiently building a portfolio of high-quality, cash-generative, significantly undervalued businesses that have pricing power.
This has admittedly been less rewarding than taking risky bets on unimaginably expensive assets. It may lack the excitement of sinking money into the darlings you see in the news every day, but we hope that our stocks will look like rare gems when the euphoria condenses into despair. As we keep repeating in every letter, the market is insanely overvalued. Our portfolio is anything but – we don’t own “the market”.
*A question may arise:Why did I not tell my dentist friend to pick individual stocks? He runs a busy dental practice and wouldn’t have the time or the training to pick stocks.
Why didn’t I offer him our services? IMA manages all my and my family’s liquid assets, but I have a rule that I never (ever!) break – I don’t manage my friends’ money. I’ll help them as much as possible with free advice but will never have a professional relationship with them. I intentionally create a separation between my personal and professional lives. After a difficult day in the market, I want to be able to go for beers with friends and leave the market at the office.
Also, this simplifies my relationships with my friends. There is no ambiguity in our friendship.
You can also listen to a professional narration of this article on iTunes & online.
ENCORE: March 22, 2004
A basic property of religion is that the believer takes a leap of faith: to believe without expecting proof. Often you find this property of religion in other, unexpected places – for example, in the stock market. It takes a while for a company to develop a “religious” following: only a few high-quality, well-respected companies with long track records ever become worshipped by millions of investors. My partner, Michael Conn, calls these “religion stocks.” The stock has to make a lot of shareholders happy for a long period of time to form this psychological link.
The stories (which are often true) of relatives or friends buying few hundred shares of the company and becoming millionaires have to fester a while for a stock to become a religion. Little by little, the past success of the company turns into an absolute – and eternal – truth. Investors’ belief becomes set: the past success paints a clear picture of the future.
Gradually, investors turn from cautious shareholders into loud cheerleaders. Management is praised as visionary. The stock becomes a one-decision stock: buy. This euphoria is not created overnight. It takes a long time to build it, and a lot of healthy pessimists have to become converted into believers before a stock becomes a “religion.”
Once a stock is lifted up to “religion” status, beware: Logic is out the window. Analysts start using T-bills to discount the company’s cash flows in order to justify extraordinary valuations. Why, they ask, would you use any other discount rate if there is no risk? When a T-bill doesn’t do the trick, suddenly new and “more appropriate” valuation metrics are discovered.
Other investors don’t even try to justify the valuation – the stock did well for me in the past, why would it stop working in the future? Faith has taken over the stock. Fundamentals became a casualty of “stock religion.” These stocks are widely held. The common perception is that they are not risky.
The general public loves these companies because they can relate to the companies’ brands. A dying husband would tell his wife, “Never sell _______ (fill in the blank with the company name).” Whenever a problem surfaces at a “religion stock,” it is brushed away with the comment that “it’s not like the company is going to go out of business.” True, a “religion stock” company is a solid leader in almost every market segment where it competes and the company’s products carry a strong brand name. However, one should always remember to distinguish between good companies and good stocks.
Coca-Cola is a classic example of a “religion stock.” There are very few companies that have delivered such consistent performance for so long and have such a strong international brand name as Coca-Cola. It is hard not to admire the company.
But admiration of Coca-Cola achieved an unbelievable level in the late nineties. In the ten years leading up to 1999, Coca-Cola grew earnings at 14.5% a year, very impressive for a 103-year-old company. It had very little debt, great cash flow and a top-tier management. This admiration came at a steep price: Coca-Cola commanded a P/E of 47.5. That P/E was 2.7 times the market P/E. Even after T-bills could no longer justify Coke’s valuation, analysts started to price “hidden” assets – Coke’s worldwide brand. No money manager ever got fired for owning Coca-Cola.
The company may not have had a lot of business risk. But in 1999, the high valuation was pricing in expectations that were impossible for any mature company to meet. “The future ain’t what it used to be” – Yogi Berra never lets us down. Success over a prolonged period of time brings a problem to any company – the law of large numbers.
Enormous domestic and international market share, combined with maturity of the soft drink market, has made it very difficult for Coca-Cola to grow earnings and sales at rates comparable to the pre-1999 years. In the past five years, earnings and sales have grown 2.5% and 1.5% respectively. After Roberto C. Goizueta’s death, Coke struggled to find a good replacement – which it acutely needed.
Old age and arthritis eventually catch up with “religion stocks.” No company can grow at a fast pace forever. Growth in earnings and sales eventually decelerates. That leads to a gradual deflation of the “religion” premium. For Coke, the descent from its “religious” status resulted in a drop of nearly 20% in the share price – versus an increase of 65% in the broad market over the same time. And at current prices, the stock still is not cheap by any means. It trades at 25 times December 2004 earnings, despite expectations for sales growth in the mid single digits and EPS growth in the low double digits.
It takes a while for the religion premium to be totally deflated because faith is a very strong emotion. A lot of frustration with sub-par performance has to come to the surface.
Disappointment chips away at faith one day at a time. “Religion” stocks are not safe stocks. The leap of faith and perception of safety come at a large cost: the hidden risk of reduction in the “religion premium.” The risk is hidden because it never showed itself in the past. “Religion” stocks by definition have had an incredibly consistent track record. Risk was rarely observed.
However, this hidden risk is unique because it is not a question of if it will show up but a question of when. It is very hard to predict how far the premium will inflate before it deflates – but it will deflate eventually. When it does, the damage to the portfolio can be huge.
Religion stocks generally have a disproportionate weight in portfolios because they are never sold – exposing the trying-to-be-cautious investor to even greater risks. Coca-Cola is not alone in this exclusive club. General Electric, Gillette, Berkshire Hathaway are all proud members of the “religion stock” club as well. Past members would include: Polaroid – bankrupt; Eastman Kodak – in a major restructuring; AT&T – struggling to keep its head above water. That stock is down from over $80 in 1999 to $18 today.
Emotions have no place in investing. Faith, love, hate, and disgust should be left for other aspects of our life. More often than not, emotions guide us to do the opposite of what we need to do to be successful. Investors need to be agnostic towards “religion stocks.” The comfort and false sense of certainty that those stocks bring to the portfolio come at a huge cost: prolonged under performance.
My thoughts today (20+ years later)
This is one of the first investment articles I ever wrote. I had just started writing for TheStreet.com. It’s interesting to read this article more than 20 years later. I am surprised my writing was not as bad as I had feared (though in many cases it was worse than I feared when I read my other early articles).
So much has happened since then – I am a different person today than I was back then. I have two more kids; I have written three more books and a thousand articles. The last two decades were my formative years as an investor and adult.
The goal of the article was not to make predictions but to warn readers that the long-term success of certain companies creates a cult-like following and deforms thinking. In fact, my original article – the one I submitted to TheStreet.com – did not mention any companies other than Coke. The editors wanted me to include more names so that the article would show up on more pages of Yahoo! Finance.
With the exception of Berkshire Hathaway, all of these companies have produced mediocre or horrible returns. In the best case, their fundamental returns in their old age were only a fraction of what they were when these companies were younger and the world was their oyster.
To my surprise, Coke’s stock is still trading at a high valuation. Its business has performed like the old-timer it is, with revenue and earnings growing by only 3–4% a year. The days of double-digit revenue and earnings growth were left in the 80s and 90s, though the high valuation remained.
Posted on March 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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Base-Erosion Anti-Abuse Tax (BEAT): The 2017 tax reforms moved the U.S. from a worldwide taxation system to a quasi-territorial system, so foreign earnings are no longer included in a company’s domestic tax base.
To discourage companies operating in the U.S. from avoiding tax liability by shifting profits out of the country, Congress imposed a 10% minimum tax called Base-Erosion Anti-Abuse Tax (BEAT). The BEAT rate will increase from 10% to 12.5% in 2026.
Posted on March 4, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
Electronic Data Gathering, Analysis, and Retrieval
By Staff Reporters
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EDGAR (Electronic Data Gathering, Analysis, and Retrieval) is an internal database system operated by the U.S. Securities and Exchange Commission (SEC) that performs automated collection, validation, indexing, and accepted forwarding of submissions by companies and others who are required by law to file forms with the SEC. The database contains a wealth of information about the commission and the securities industry which is freely available to the public via the Internet.
In September 2017, SEC Chairman Jay Clayton revealed the database had been hacked and that companies’ data may have been used by criminals for insider trading.
In general, a roadshow is a series of meetings or presentations in which key members of a private company, usually executives, pitch the initial public offering, or IPO, to prospective investors. Effectively, the company is taking its branding message on the road to meet with investors in different cities, hence the name.
The IPO roadshow presentation is an important part of the IPO process in which a company sells new shares to the public for the first time. Whether a company’s IPO succeeds or not can hinge on interest generated among investors before the stock makes its debut on an exchange.
There are also some cases where company executives will embark on a road show to meet with investors to talk about their company, even if they’re not planning an IPO.
Pros and Cons of a Roadshow
According to Rebecca Lake, if the company goes public and no one buys its shares, then the IPO ends up being a flop, which can affect the company’s success in the near and long term. If the company experiences an IPO pop, in which its price goes much higher than its initial offering price, it could be a sign that underwriters mispriced the stock.
A roadshow is also important for helping determine how to price the company’s stock when the IPO launches. If the roadshow ends up being a smashing success, for example, that can cause the underwriters to adjust their expectations for the stock’s IPO price.
On the other hand, if the roadshow doesn’t seem to be generating much buzz around the company at all, that could cause the price to be adjusted downward.
In a worst-case scenario, the company may decide to pull the plug on the IPO altogether or to go a different route, such as a private IPO placement.
If the definition of a security is title to a stream of cash flows, then the dividends a company is expected to pay to equity shareholders on a periodic basis (e.g., quarterly) are a clear source of return for an investor. A dividend is simply a distribution of (some portion of) the company’s earnings to equity shareholders. Like a bond yield, a stock’s dividend yield can be used to measure the income return on the stock.
To determine a stock’s dividend yield, the trailing year’s dividends per share paid are divided by the current stock price. However, a key difference between a dividend yield and a bond yield is the level of certainty that can be assumed regarding future payments, since a bond’s coupon is generally predetermined and its payment is expected to be senior to the payment of dividends.
After a company has determined that it has earned a profit, management has to decide what to do with those profits. One choice is to distribute the earnings to shareholders in the form of dividends, while another option is to reinvest the profits in the company. A company’s management may determine that the shareholders interest is best served by using the earnings to pursue growth opportunities (e.g., capital expansion, research & development, etc.) at the corporate level. Thus, when management believes that its investment opportunities are likely to produce a higher return than what investors’ could generate with their dividends or that reinvestment is needed to maintain its financial strength, the company will retain the earnings.
One of the biggest myths in investing is capital appreciation accounts for the largest part of investors’ gains. Dividends, or cash payments to shareholders, actually account for a substantial part of an equity investor’s total return. In fact since 1926, dividends have accounted for more than 40% of the total return of the S&P 500 stock index. In the last decade (2000-2009), the S&P 500’s total return of -9% would have been a heftier loss of -24% had it not been for the 15% contribution from dividends.
History has shown that dividends have been a powerful source of total return in a diversified investment portfolio, especially during periods of market turbulence. In examining the prior eight decades of stock market performance, dividends often account for more than 2/3 of the total return (1930s, 1940s, 1970s, & 2000s). If an investor avoided dividend paying stocks during these elongated time periods, most of the total gains would be lost.
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DIVIDEND CONTRIBUTION OF S&P 500 RETURN BY DECADE
S&P 500
Cumulative
Dividends
Average
Price %
Dividend
Total
% of Total
Payout
Years
Change
Contribution*
Return
Return
Ratio**
1930s
-41.9%
56.0%
14.1%
>100%
90.1%
1940s
34.8%
100.3%
135.0%
74.3%
59.4%
1950s
256.7%
180.0%
436.7%
41.2%
54.6%
1960s
53.7%
54.2%
107.9%
50.2%
56.0%
1970s
17.2%
59.1%
76.4%
77.4%
45.5%
1980s
227.4%
143.1%
370.5%
38.6%
48.6%
1990s
315.7%
117.1%
432.8%
27.0%
47.6%
2000s
-24.1%
15.0%
-9.1%
>100%
35.3%
2010s
27.9%
8.4%
36.3%
23.1%
28.4%
as of 12/31/12
Source: Strategas
During those decades such as the 2000s where the stock market struggled to advance, dividends were a significant element for investor survival. This is not only due to the dividends alone, but also the risk element of stocks that pay dividends. Dividend stocks have historically provided lower overall volatility and stronger downside protection when markets decline. Since 1927, dividend stocks have consistently held up better than the broader market during downturns. You can measure downside risk through a statistic known as downside capture ratio.
Downside capture ratio is a statistical measure of overall performance in a down stock market. An investment category, or investment manager, who has a down-market ratio less than 100 has outperformed the index during a falling stock market.
For example, a down-market capture ratio of 80 indicates that the portfolio measure declined only 80% as much as the index during the period. The downside capture ratio of high-dividend-yielding stocks, since 1927, has been 81% or lower over various long-term periods. Put a better way, during months that the S&P 500 stock index fell, dividend stocks declined by nearly 19% less than the broader market.
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DOWNSIDE AND UPSIDE CAPTURE RATIOS OF HIGH DIVIDEND STOCKS – 1927 TO 2011
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com
Posted on March 1, 2025 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.
US stocks gained ground Friday following a key inflation reading that largely met expectations and as fresh tariff threats added to uncertainty over Big Tech prospects. The S&P 500 (^GSPC) gained 1.6%%, while the tech-heavy NASDAQ Composite (^IXIC) was up about 1.5% after suffering a Nvidia-led (NVDA) sell-off on Thursday. The Dow Jones Industrial Average (^DJI) climbed 1.3%. All three major averages reversed earlier losses, sending February off with a relief rally.
Markets wrapped the month February with sharp weekly and monthly losses after suffering the buffets of tariff moves. The NASDAQ shed close to 5% in February, while the S&P 500 and Dow suffered drops of around 2%.
Investing in Growth Stocks – Catching the Momentum [BIG-MO]
The growth style of investing focuses on companies with strong earnings and accelerating capital growth. A growth investor will make investment decisions based on forecasts of continuing growth in earnings. Growth investing emphasizes qualitative criteria, including value judgments about the company, its markets, its management, and its ability to extract future earnings growth from the particular industry.
Quantitative indicators of interest to the growth investor include high Price/Earnings ratios, Price/Sales ratios, and low dividend yields. A high P/E ratio suggests that the market is prepared to pay more per share in anticipation of future earnings. A low dividend yield suggests that the company is reinvesting rather than distributing profits. These indicators are considered in relation to the company’s immediate competitors. The companies with the highest P/E ratios relative to their industry will often be dominant within their market segment and have strong growth prospects. Growth investors will generally focus on premium and leading-edge companies.
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Some industry sectors by their nature have stronger growth characteristics, particularly more innovative and speculative industries.
For example, during the bull market run on the U.S. stock markets during the late 1990s, the technology sector was a major area of growth investment. On observing strong earnings growth, a growth investor will decide whether to buy shares based on whether the company’s growth is going to continue at its present rate, to increase, or to decrease. If it is expected to increase, the growth investor will consider it a candidate for purchase. The key research question is: at what point will the company’s growth flatten out, or fall? If a company’s growth rate slows or reverses, it is no longer attractive to a growth investor. Growth investors are normally prepared to pay a premium for what they believe to be high quality shares. The potential downside in growth investing is that if a company goes into sudden decline and the share price falls, you can lose capital value rapidly.
Growth stocks, like the current “Magnificent-Seven“, carry high expectations of above-average future growth in earnings and above-average valuations. Investors expect these stocks to perform well in the future and are willing to pay high P/E multiples for this expected growth. The danger is that the price may become too high. Generally, once a company sports a P/E ratio above 50, the risk significantly escalates. Many technology growth stocks traded at a P/E ratio of above 100 during 1999. This is unsustainable. No company in the history of the stock market has been able to maintain such a high P/E level for a sustained period of time.
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: MarcinkoAdvisors@outlook.com
While in Omaha for the Berkshire Hathaway annual meeting one year, I participated in an investment panel hosted by a local chapter of the Young Presidents’ Organization. I had the privilege of sharing the stage with such industry giants as Tom Russo, a partner of Gardner Russo & Gardner (famous for knowing more about consumer stocks than the management that runs them), and Tom Gayner, president and CIO of Markel Corp., a specialty insurance company that on many levels resembles the Berkshire of 30 years ago.
We were asked how much time a value investor should spend on macro forecasting. Usually macro forecasting is frowned upon in the value investing community, and Berkshire CEO Warren Buffett has everything to do with that. He is famous for saying (and I am paraphrasing), “My decision making would not change even if I knew what the Federal Reserve will do with interest rates next month.” There is sound logic behind this: Forecasting the economy is incredibly difficult in the short run. The economy is not unlike a black box with hundreds of gauges on it that in the near term give you conflicting readings about what’s inside it.
For this reason macro forecasting was disapproved of by value investors, and for 20 years this attitude paid off. The economic climate was favorable, the stock market was in overdrive, price-earnings ratios were expanding. Macro did not matter — until the housing bubble and financial crisis. Value investors who had had their heads in the sand got annihilated.
Things in life often swing, pendulum-like, from one extreme to another. Right after a crisis every investor is a macro expert. It’s kind of hilarious: Investors who just a few years earlier didn’t even know the names of most economic indicators are now spitting them out in conversations as though they had absorbed them with their mother’s milk. So what should investors do — become macro experts or economic ignoramuses?
Believe it or not, there is a logical and, more important, a practical answer to this question. As an investor you want to spend very little time on forecasting the weather (that is, what the Fed will do with interest rates next month or the rate of growth of the economy). Weather forecasting, first of all, is not always accurate, but it will certainly consume a lot of time and energy, and the forecasts have a very finite shelf life. Yesterday’s weather is irrelevant today. As long as you own companies that can survive rain without catching pneumonia — even a few weeks of rain — weather forecasting is a waste of time. This is what Buffett was implying by saying he didn’t want to be a macro forecaster.
However, instead of being a weatherman (or weatherwoman), as an investor you want to pay serious attention to “climate change” — significant shifts in the global economy that can impact your portfolio. This is exactly what Buffett did over the past few decades — he was warning about the weak dollar because of trade-deficit imbalances (he even put on a trade that bet against the dollar). He also warned about derivatives — “weapons of mass destruction” — and tried to cleanse them from the portfolio of General Re (an insurance company Berkshire acquired) as fast as he could.
A capital call is a notice sent to investors requesting that they contribute additional capital to a private equity fund. Capital calls are made when the fund manager has identified a new investment opportunity that requires additional funds.
Investors must be prepared to respond to capital calls with the required funds in a timely manner, as failure to do so could result in penalties or even the loss of their investment.
Carried Interest: Understanding the Concept
Carried interest is a form of incentive fee paid to private equity fund managers. This fee is calculated as a percentage of the profits generated by the fund’s investments.
Carried interest is often criticized as a tax loophole, as it is treated as capital gains, which are taxed at a lower rate than ordinary income.
Deal Flow: What it Means for Investors
Deal flow refers to the number of potential investment opportunities that a private equity firm evaluates. A robust deal flow is important for private equity firms, as it provides a pipeline of potential investments to consider.
Investors may want to investigate a private equity firm’s deal flow as part of their due diligence process, as a strong deal flow can indicate the firm has a good track record of finding attractive investment opportunities.
Due Diligence: A Key Step in Private Equity Investing
Due diligence is the process of evaluating a potential investment opportunity to assess its viability. This process involves a thorough investigation of the company’s financials, operations, and management team.
Due diligence is a critical step in the private equity investment process, as it helps to identify potential risks associated with an investment opportunity. Investors who skip due diligence do so at their own risk.
Exit Strategy: How Private Equity Firms Make Money
Exit strategy refers to the plan that private equity firms have in place to cash out of their investments. Private equity firms typically exit investments through an initial public offering (IPO), a sale to another company, or a management buyout.
Exit strategy is critical to the private equity investment process, as it is how investors ultimately make returns on their investments.
Fund of Funds: An Overview
A fund of funds is a type of investment fund that invests in other investment funds. In the private equity space, fund of funds typically invest in a portfolio of private equity funds.
Fund of funds can be a good way for investors to gain exposure to a wider range of private equity investments with less risk than investing in individual funds.
General Partner vs Limited Partner: What’s the Difference?
The general partner is the party responsible for managing the private equity fund and making investment decisions. Limited partners, on the other hand, are typically passive investors who provide capital but have little involvement in the investment process.
The distinction between general partners and limited partners is important for investors to understand, as it can impact their level of involvement in the investment process.
Investment Horizon: A Crucial Factor in Private Equity Investments
Investment horizon refers to the length of time an investor plans to hold an investment. In the private equity space, investment horizons can be several years or even a decade.
Investment horizon is a critical factor for investors to consider, as it impacts the level of liquidity they will have and the returns they can expect to make on their investment.
Leveraged Buyout (LBO): Definition and Examples
A leveraged buyout is a type of acquisition where the acquiring company uses a significant amount of debt to finance the purchase. The idea is that the acquired company’s assets will be used as collateral to secure the debt.
Leveraged buyouts can be an effective way for private equity firms to acquire companies with minimal capital investment. However, the use of leverage also increases the risk associated with these types of acquisitions.
Management Fee vs Performance Fee: Understanding the Two
The management fee is the fee paid to the general partner for managing the private equity fund. The performance fee, or carried interest, is paid based on the fund’s performance and returns generated for investors.
The distinction between management fees and performance fees is important for investors to understand, as it affects the level of fees they will be responsible for paying.
Pitchbook: A Guide to Creating an Effective Pitchbook
A pitchbook is a presentation used by private equity firms to pitch their investment strategy to potential investors. An effective pitchbook should be clear, well-organized, and provide a compelling rationale for why investors should consider investing in the fund.
Investors reviewing a fund’s pitchbook should look for evidence of a well-thought-out investment strategy and a track record of successful investments.
Private Placement Memorandum (PPM): What it is and Why It Matters
A private placement memorandum is a legal document provided to potential investors that details the terms of the private equity fund. It includes information on the fund’s investment strategy, expected returns, fees, and risks associated with the investment.
Reviewing a fund’s private placement memorandum is a critical step in the due diligence process, as it provides investors with a comprehensive understanding of the investment opportunity.
Recapitalization: A Strategy for Restructuring a Company
Recapitalization is a strategy used by private equity firms to restructure a company’s capital structure. This can involve issuing debt to pay off equity holders or issuing equity to pay off debt holders.
Recapitalization is often used to improve a company’s financial position and increase its value, making it a key tool in the private equity arsenal.
Valuation Techniques Used in Private Equity Investing
Valuation techniques are used to determine the value of a private company. These techniques can include discounted cash flow analysis, market multiples analysis, and asset-based valuation.
Understanding valuation techniques is important for investors, as it allows them to evaluate the relative value of investment opportunities and make informed investment decisions.
Posted on February 21, 2025 by Dr. David Edward Marcinko MBA MEd CMP™
By Dan Ariely PhD
THE IRRATIONAL ECONOMIST
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Of course you don’t need a human financial advisor … until you do. Today, we’ve had unfettered internet access to a wide range of investments, opinions and models for at least two decades. So, why the bravado to go it alone; fifteen positive years for equities, since 2009! Yet, the DJIA, S&P 500 and NASDAQ just plunged and plummeted today!
The financial advisor’s role is to remove the human element and emotion from investing decisions for something as personal as your wealth. Emotion drives the retail investor to sell low (fear) and buy high (greed). This is the reason why the average equity returns for retail investors is less than half of the S&P 500’s returns.
No, of course you don’t need a human financial advisor … until you do.
Whether you know it, or not, inflation is your biggest financial and investing enemy. Fortunately, the rule of 70 will tell you in how many years the value of money will be halved.
For example, you just need to divide 70 with the rate of inflation. So if the rate of inflation is 7%, then 70/7 = 10 years. Therefore, in 10 years, your 100 note will be worth 50.
Note: The phrase rule of thumb refers to an approximate method for doing something, based on practical experience rather than theory. This usage of the phrase can be traced back to the 17th century and has been associated with various trades where quantities were measured by comparison to the width or length of a human adult thumb.
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STUPID COMMENTS: Financial Advisors Say to Physician Clients
BY DR. DAVID EDWARD MARCINKO; MBA MEd CMP®
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SPONSOR: http://www.MarcinkoAssociates.com
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Some Stupid Things Financial Advisors Say to Physician Clients
A few years ago and just for giggles, colleague Lon Jefferies MBA CFP® and I collected a list of dumb-stupid things said by some Financial Advisors to their doctor, dentist, nurse and and other medical professional clients, along with some recommended under-breath rejoinders:
So, don’t let these aphorisms blind you to the critical thinking skills you learned in college, honed in medical school and apply every day in life.
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EDUCATION: Books
SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit a RFP for speaking engagements: CONTACT: MarcinkoAdvisors@outlook.com
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