TRADITIONAL INVESTMENT PORTFOLIO DIVERSIFICATION MODEL: Routed by Larry Fink CEO of BlackRock?

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).

CORRELATION: https://medicalexecutivepost.com/2024/10/27/correlation-diversification-in-finance-and-investments/

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.“

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

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DAILY UPDATE: Superior HealthPlan, Larry Fink and the Mixed Stock Markets

Posted on April 2, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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

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The CEO of a Texas health insurance company was fired after admitting before a DOGE panel of state lawmakers that he hired private investigators to spy on customers and obtain sensitive details about their lives. Mark Sanders was dismissed from his duties as chief executive of Austin-based Superior HealthPlan after he testified before the Texas House Delivery of Government Efficiency Committee in a hearing on Medicaid procurement last week.

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

US stocks closed mixed on Tuesday as investors cautiously counted down to President Trump’s highly anticipated “Liberation Day” rollout of sweeping new reciprocal tariffs. The S&P 500 (^GSPC) rose about 0.4%, extending the gains the benchmark index secured on Monday, while the Dow Jones Industrial Average (^DJI) fell just below the flatline. The tech-heavy NASDAQ Composite (^IXIC) rebounded to close up around 0.9%.

CITE: https://tinyurl.com/tj8smmes

BlackRock CEO Larry Fink said private markets should be open to all investors, not just the wealthy few in his annual letter to investors (here.)

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

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WHAT IS THE PURPOSE OF A “Modern” CORPORATION?

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

An Emerging New Definition?

By Dr. David Edward Marcinko MBA MEd CMP

When I was in business school back-in-the day, I studied the late great economist Milton Friedman Ph.D who opined that the purpose of a corporation was to enhance shareholder value, in an ethical and legal manner; period? Shareholders could then do what they wished with profits; if any. Charitable giving or Selfish intent, etc!

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Now, for those of you who haven’t had time to review the recent seismic tome from The Business Roundtable Announcement this week, let me review why this is as big a moment as the Larry Fink BlackRock letter.

  • The Business Roundtable, a group of chief executive officers of nearly 200 major U.S. corporations, issues a statement with a new definition of the “purpose of a corporation.” Seven [7] refused to sign.
  • The reimagined idea of a corporation drops the age-old notion that they function first and foremost to serve their shareholders and maximize profits.
  • Investing in employees, delivering value to customers, dealing ethically with suppliers and supporting outside communities are now at the forefront of American business goals; ie., community good.

MORE: https://www.forbes.com/sites/afdhelaziz/2019/08/23/the-power-of-purpose-milton-friedman-is-rolling-in-his-grave/#6ed8506f7532

DEFINITION: A shareholder or stockholder is an individual or institution (including a corporation) that legally owns a share of stock in a public or private corporation. Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company.

DEFINITION: A stakeholder as defined in its first usage in a 1963 internal memorandum at the Stanford Research Institute, are “those groups without whose support the organization would cease to exist.” The theory was later developed and championed by R. Edward Freeman in the 1980s.

LINK: https://www.cnbc.com/2019/08/19/the-ceos-of-nearly-two-hundred-companies-say-shareholder-value-is-no-longer-their-main-objective.html

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The Conundrum [real or perceived]

Shareholders are ever stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder possesses part of a public company through shares of stock, while a stakeholder has a concern in the performance of a company for reasons other than stock performance or appreciation; ie., community good.

QUERY: So, exactly who will determine community good? And, who selects the stakeholders? Haven’t socially responsible companies, stocks, mutual funds and ETFs, etc., been in existence for decades? Is Professor Friedman rolling in his grave? OR, is this condundrum just linguistic gymnastics?

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LINK: https://www.amazon.com/Dictionary-Health-Economics-Finance-Marcinko/dp/0826102549/ref=sr_1_6?ie=UTF8&s=books&qid=1254413315&sr=1-6

Your thoughts are appreciated.

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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DAILY UPDATE: T-Market Crash, Amazon Healthcare Launches as the Markets Take a Breather

Posted on November 9, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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  • Big banks are sitting on $650 billion of unrealized losses, Moody’s has estimated.
  • It’s a sign even Wall Street’s best-known names are feeling the heat from the Treasury-market rout.
  • Crashing bond prices sank Silicon Valley Bank earlier this year, and there may be more chaos to come.

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

Yet, the billionaire Larry Fink says investors should be 100% in equities right now if they can handle it? Can you?

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Amazon.com is turning to Prime members to bolster its healthcare business, an industry where the company has sought to expand for years. The tech giant just revealed plans to offer its millions of Amazon Prime subscribers a low-cost annual membership to One Medical, the primary-care business Amazon purchased for $3.9 billion earlier this year. Amazon says Prime subscribers can now become One Medical members for $9 a month, or $99 a year. The typical cost to become a One Medical member is $199 annually.

RxPass: https://medicalexecutivepost.com/2023/01/27/amazon-launches-rxpass-generic-drug-subscription-program/

Clinic: https://medicalexecutivepost.com/2022/12/01/amazon-healthcare-act-ii/

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The S&P 500 continued to an eighth positive day, building on its longest hot streak in two years, while the Dow inched downward, ending its best run since July. Warner Bros. Discovery suffered its worst day since March 2021 after reporting that although Barbie raked in $1.5 billion for the company, it still lost money last quarter.

Here is where the major benchmarks ended:

  • The S&P 500 Index was up 4.40 points (0.1%) at 4,382.78; the Dow Jones Industrial Average was down 40.33 points (0.1%) at 34,112.27; the NASDAQ Composite was up 10.56 points (0.1%) at 13,650.41.
  • The 10-year Treasury note yield (TNX) was down about 6 basis points at 4.511%.
  • CBOE’s Volatility Index (VIX) was down 0.36 at 14.45.

Retailers and banks were among the weakest performers Wednesday. Energy stocks also slipped in step with WTI crude oil futures, which touched a 3½-month low of under $75 a barrel on escalating concern over global demand. Real estate was one of the few sectors to rise Wednesday.

The U.S. dollar index (DXY) rose to a seven-week high earlier in the day before fading.

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