RISK ADJUSTED RATE OF RETURN: In Finance

Posted on November 21, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd

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In the realm of finance and investment, the pursuit of profit is inseparable from the presence of risk. Every investor, whether an individual or an institution, must grapple with the reality that higher returns often come with greater uncertainty. To evaluate investments effectively, it is not enough to look at raw returns alone. Instead, one must consider how much risk was undertaken to achieve those returns. This balance is captured by the concept of the risk-adjusted rate of return, a cornerstone of modern portfolio theory and investment analysis.

The risk-adjusted rate of return measures the profitability of an investment relative to the risk assumed. Unlike simple return calculations, which only show the percentage gain or loss, risk-adjusted metrics incorporate volatility and other forms of uncertainty. For example, two investments may both yield a 10% annual return, but if one is highly volatile and the other is stable, the stable investment is more attractive when viewed through a risk-adjusted lens. This approach ensures that investors are not misled by high returns that are achieved through excessive risk-taking.

Several tools have been developed to calculate risk-adjusted returns. The Sharpe Ratio is among the most widely used. It measures excess return per unit of risk, with risk defined as the standard deviation of returns. A higher Sharpe Ratio indicates that an investment is delivering better returns for the level of risk taken. Another measure, the Treynor Ratio, evaluates returns relative to systematic risk, using beta as the risk measure. The Sortino Ratio refines the Sharpe Ratio by focusing only on downside volatility, thereby distinguishing between harmful risk and general fluctuations. Each of these metrics provides a different perspective, but all share the same goal: to assess whether the reward justifies the risk.

The importance of risk-adjusted returns extends beyond individual securities to entire portfolios. Portfolio managers use these metrics to compare strategies, evaluate asset allocations, and determine whether their investment approach aligns with client objectives. For instance, a hedge fund may report impressive raw returns, but if those returns are accompanied by extreme volatility, its risk-adjusted performance may be inferior to that of a conservative mutual fund. By incorporating risk-adjusted measures, investors can make more informed decisions and build portfolios that reflect their risk tolerance and long-term goals.

Risk-adjusted returns also play a vital role in distinguishing skill from luck in investment management. A manager who consistently delivers high risk-adjusted returns demonstrates genuine expertise in navigating markets. Conversely, a manager who achieves high raw returns through excessive risk-taking may simply be gambling with investor capital. This distinction is critical for institutions and individuals alike, as it ensures that performance evaluations are grounded in sustainability rather than short-term speculation.

Of course, risk-adjusted metrics are not without limitations. They often rely on historical data, which may not accurately predict future outcomes. Market conditions can change rapidly, and past volatility may not reflect future risks. Additionally, different metrics may yield conflicting results, complicating the decision-making process. Despite these challenges, risk-adjusted returns remain indispensable because they encourage investors to look beyond superficial gains and consider the broader context of risk management.

In conclusion, the risk-adjusted rate of return is a fundamental concept in investment analysis. By integrating both risk and reward into a single measure, it empowers investors to evaluate opportunities more effectively, compare diverse assets, and build resilient portfolios. While no metric is flawless, the emphasis on risk-adjusted performance ensures that investment decisions are not driven solely by the pursuit of high returns but by the pursuit of sustainable, well-balanced growth. In a financial landscape defined by uncertainty, the ability to measure success in terms of both profit and prudence is what ultimately separates wise investing from reckless speculation.

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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 an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors@outlook.com -OR- http://www.MarcinkoAssociates.com

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Rethinking Productivity in Wealth Management

Posted on October 31, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Vitaliy Katsenelsen CFA

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One of the biggest hazards of being a professional money manager is that you are expected to behave in a certain way.

One of the biggest hazards of being a professional money manager is that you are expected to behave in a certain way: You have to come to the office every day, work long hours, slog through countless emails, be on top of your portfolio (that is, check performance of your securities minute by minute), watch business TV and consume news continuously, and dress well and conservatively, wearing a rope around the only part of your body that lets air get to your brain. Our colleagues judge us on how early we arrive at work and how late we stay. We do these things because society expects us to, not because they make us better investors or do any good for our clients.

Somehow we let the mindless, Henry Ford–assembly-line, 8:00 a.m. to 5:00 p.m., widgets-per-hour mentality dictate how we conduct our business thinking. Though car production benefits from rigid rules, uniforms, automation and strict working hours, in investing — the business of thinking — the assembly-line culture is counterproductive. Our clients and employers would be better off if we designed our workdays to let us perform our best.

Investing is not an idea-per-hour profession; it more likely results in a few ideas per year. A traditional, structured working environment creates pressure to produce an output — an idea, even a forced idea. Warren Buffett once said at a Berkshire Hathaway annual meeting: “We don’t get paid for activity; we get paid for being right. As to how long we’ll wait, we’ll wait indefinitely.”

How you get ideas is up to you. I am not a professional writer, but as a professional money manager, I learn and think best through writing. I put on my headphones, turn on opera and stare at my computer screen for hours, pecking away at the keyboard — that is how I think. You may do better by walking in the park or sitting with your legs up on the desk, staring at the ceiling.

I do my best thinking in the morning. At 3:00 in the afternoon, my brain shuts off; that is when I read my emails. We are all different. My best friend is a brunch person; he needs to consume six cups of coffee in the morning just to get his brain going. To be most productive, he shouldn’t go to work before 11:00 a.m.

And then there’s the business news. Serious business news that lacked sensationalism, and thus ratings, has been replaced by a new genre: business entertainment (of course, investors did not get the memo). These shows do a terrific job of filling our need to have explanations for everything, even random events that require no explanation (like daily stock movements). Most information on the business entertainment channels — Bloomberg Television, CNBC, Fox Business — has as much value for investors as daily weather forecasts have for travelers who don’t intend to go anywhere for a year.

Yet many managers have CNBC, Fox or Bloomberg TV/Internet streaming on while they work.

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SEPTEMBER: Stock Markets

Posted on September 29, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By A.I.

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2025: With just two days left in September—and the third quarter—stocks rose throughout a month that is historically the worst any for the market.

The major indexes ticked lower last week, though, as artificial intelligence names like Oracle got hit after some analysts expressed concerns over the eye-watering costs of the AI build-out.

MORE: https://medicalexecutivepost.com/2025/09/10/stock-market-beware-manipulation-schemes/

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INVESTMENTS: Four Firm Updates

Posted on August 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By A.I.

SPONSOR: http://www.MarcinkoAssociates.com

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UnitedHealth Group soared almost 12%, its biggest one-day gain in nearly five years, after getting the “Buffett Bounce.” Buffett’s Berkshire Hathaway revealed it bought ~5 million shares worth nearly $1.6 billion, giving a much-needed vote of confidence to the struggling health giant.

The White House is considering buying part of Intel, Bloomberg reported this week, which would be the latest big business deal the president pursues on behalf of the government. The Trump administration might acquire a stake in the struggling computer chip-maker using CHIPS Act funding—nearly $11 billion of which was already earmarked for Intel.

Saudi Arabia’s Public Investment Fund took an $8 billion write-down on five mega-projects it’s building, due to lower oil prices and higher costs.

Pimco, the asset management giant, warned that President Trump’s plan to IPO Fannie Mae and Freddie Mac could push mortgage rates higher.

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PROSPECT THEORY: In Client Empowerment and Financial Decision Making

Posted on August 8, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd

SPONSOR: http://www.MarcinkoAssociates.com

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PROSPECT THEORY

In the early 1980s, Daniel Kahneman and Amos Tverskey proved in numerous experiments that the reality of decision making differed greatly from the assumptions held by economists. They published their findings in Prospect Theory: An analysis of decision making under risk, which quickly became one of the most cited papers in all of economics.

KAHNEMAN: https://medicalexecutivepost.com/2024/03/28/rip-daniel-kahneman-phd/

To understand the importance of their breakthrough, we first need to take a step back and explain a few things. Up until that point, economists were working under a normative model of decision making. A normative model is a prescriptive approach that concerns itself with how people should make optimal decisions. Basically, if everyone was rational, this is how they should act.

INVESTING PSYCHOLOGY: https://medicalexecutivepost.com/2025/02/21/investing-psychology/

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REAL-LIFE EXAMPLE

Amanda, an RN client, was just informed by her financial advisor that she needed to re-launch her 403-b retirement plan. Since she was leery about investing, she quietly wondered why she couldn’t DIY. Little does her Financial Advisor know that she doesn’t intend to follow his advice, anyway! So, what went wrong?

The answer may be that her advisor didn’t deploy a behavioral economics framework to support her decision-making. One such framework is the “prospect theory” model that boils client decision-making into a “three step heuristic.”

According to colleague Eugene Schmuckler PhD MBA MEd CTS, Prospect theory makes the unspoken biases that we all have more explicit. By identifying all the background assumptions and preferences that clients [patients] bring to the office, decision-making can be crafted so that everyone [family, doctor and patient] or [FA, client and spouse] is on the same page.

INVESTING MIND TRAPS: https://medicalexecutivepost.com/2025/06/12/psychology-common-finance-and-investing-mind-traps/

Briefly, the three steps are:

1. Simplify choices by focusing on the key differences between investment [treatment] options such as stock, bonds, cash, and index funds.

2. Understanding that clients [patients] prefer greater certainty when it comes to pursuing financial [health] gains and are willing to accept uncertainty when trying to avoid a loss [illness].

3. Cognitive processes lead clients and patients to overestimate the value of their choices thanks to survivor bias, cognitive dissonance, appeals to authority and hindsight biases.

CITE: Jaan E. Sidorov MD [Harrisburg, PA]

Assessment

Much like in healthcare today, the current mass-customized approaches to the financial services industry fall short of recognizing more personalized advisory approaches like prospect theory and assisted client-centered investment decision-making.

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BIAS: Beware Overconfident Investing

Posted on July 13, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters and A.I.

SPONSOR: http://www.CertifiedMedicalPlanner.org

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OVERCONFIDENT INVESTING BIAS

Overconfident Investing Bias happens when we believe we can out-smart other investors via market timing or through quick, frequent trading. This causes the results of a study to be unreliable and hard to reproduce in other research settings.

Example: Data convincingly shows that people and financial planners/advisors and wealth managers who trade most often under-perform the market by a significant margin over time. Active traders lose money.

Example: Overconfidence Investing Bias moreover leads to: (1) excessive trading (which in turn results in lower returns due to costs incurred), (2) underestimation of risk (portfolios of decreasing risk were found for single men, married men, married women, and single women), (3) illusion of knowledge (you can get a lot more data nowadays on the internet) and (4) illusion of control (on-line trading).

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MORE:

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VIX FEAR INDEX: Down

Posted on June 30, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By AI

CBOE Volatility Index

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There’s a lot of confidence in markets these days, and nowhere is that more apparent than in the VIX, aka the CBOE Volatility Index, aka aka the Fear Index.

According to Brew Markets, the VIX literally measures the market’s expectation of volatility based on S&P 500 index options, but it’s become a shorthand way of quantifying investors’ fear or confidence. Any time the VIX rises above 30, it’s taken as a sign of some serious trepidation in the market—but anytime it falls below 20, the market is calm, cool, and collected.

The VIX skyrocketed to over 50 on Liberation Day as investors fretted over what tariffs meant for their portfolios, but it’s been gradually falling ever since. As the chart above shows, the VIX just fell below its key support level of 17—a mark it has failed to break below recently, and a move that underlines investors’ confidence that the good times will keep rolling.

VIX: https://medicalexecutivepost.com/2025/04/20/vix-stock-market-fear-gauge-update/

Whether or not that confidence is misplaced remains to be seen.

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INVESTMENT ADVISORY: Portfolio Second Opinions for Physician Colleagues

Posted on June 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

INVESTMENT PORTFOLIO REVIEWS

By Dr David Edward Marcinko MBA MEd CMP™

http://www.MarcinkoAssociates.com

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“FROM CHAOS-TO-CALM”

If you’re looking at this tab, chances are you are fed up with your financial brokerage accounts, thinking of finances, investing, retirement or all of the above.

And so, we can help

An investment portfolio second opinion, also called a “ portfolio review,” is an analysis of your financial holdings and associated strategies, allocations, fees and performance to determine whether the most effective instruments and methodologies are being utilized to reach your goals.

No Worries! You may have come to the right place.

E-Mail Ann Miller RN MHA CPHQ for an Initial Appointment: MarcinkoAdvisors@outlook.com

The purpose of this initial appointment is for you to ask a lot of questions to make sure you are comfortable with potentially working with us. It also helps if you are prepared to provide a verbal summary of your current situation.

Here are some questions to consider asking us during your first meeting:

1) Can you tell us about your financial qualifications, experience, education and training; if any?

2) Can you provide some information about your current financial advisory team?

3) On what type of investments do you typically purchase and own?

5) How much do pay your financial management firm?

6) How long have you been working with your current financial management firm?

8) What other services does your financial team provide?

9) What is your own investment philosophy?

A Fiduciary Opinion At Your Service

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MUTUAL FUNDS, SECTOR FUNDS, ETFs & INDEX FUNDS

Posted on June 15, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd CMP™

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MUTUAL FUNDS, SECTOR FUNDS, ETFs AND INDEX FUNDS

SPONSOR: http://www.MarcinkoAssociates.com

here are many ways for a doctor, osteopath, podiatrist or dentist to financially invest. Traditionally, this meant picking individual stocks and bonds. Today, there are many other ways to purchase securities en mass. For example:

MUTUAL FUND: A regulated investment company that manages a portfolio of securities for its shareholders.

Open End Mutual Funds: An investment company that invests money in accordance with specific objectives on behalf of investors. Fund assets expand or contract based on investment performance, new investments and redemptions. Trade at Net Asset Value or the price the fund shares scheduled with the US Securities and Exchange Commission (SEC) trade. NAV can change on a daily basis. Therefore, per-share NAV can, as well.

Closed End Mutual Funds: Older than open end mutual funds and more complex. A CEMF is an investment company that registers shares SEC regulations and is traded in securities markets at prices determined by investments. Shares of closed-end funds can be purchased and sold anytime during stock market hours. CEMF managers don’t need to maintain a cash reserve to redeem or / repurchase shares from investors. This can reduce performance drag that may otherwise be attributable to holding cash. CEMFs may be able to offer higher returns due to the heavier use of leverage [debt]. They are subject to volatility, less liquid than open-end funds, available only through brokers and may sells at a heavily discount or premium to [NAV] determined by subtracting its liabilities from its assets. The fund’s per-share NAV is then obtained by dividing NAV by the number of shares outstanding. .

Sector Mutual Funds: Sector funds are a type of mutual fund or Exchange-Traded Fund (ETF) that invests in a specific sector or industry such as technology, healthcare, energy, finance, consumer goods, or real estate. Sector funds focus on a particular industry, allowing investors to gain targeted exposure to specific market areas. The goal is to outperform the overall market by investing in companies within a specific sector that is expected to perform well. However, they are also more susceptible to market fluctuations and specific sector risks, making them a more specialized and potentially higher-risk investment option.

STOCKS, BONDS AND MUTUAL FUNDS: https://medicalexecutivepost.com/2025/06/11/stocks-bonds-and-commodities/

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EXCHANGE TRADED FUNDS: ETFs are a type of fund that owns various kinds of securities, often of one type. For example, a stock ETF holds stocks, while a bond ETF holds bonds. One share of the ETF gives buyers ownership of all the stocks or bonds in the fund. If an ETF held 100 stocks, then those who owned the fund would own a stake – albeit a very tiny one – in each of those 100 stocks.

ETFs are typically passively managed, meaning that the fund usually holds a fixed number of securities based on a specific preset index of investments. These are tax efficient. In contrast, many mutual funds are actively managed, with professional investors trying to select the investments that will rise and fall.

The Standard & Poor’s 500 Index is perhaps the world’s best-known index, and it forms the basis of many ETFs. Other popular indexes include the Dow Jones Industrial Average and the National Association of Securities Dealers Automated Quotations [NASDAQ] Composite Index.

ETFs based on these funds are called Index Funds and just buy and hold whatever is in the index and make no active trading decisions. ETFs trade on a stock exchange during the day, unlike mutual funds that trade only after the market closes. With an ETF you can place a trade whenever the market is open and know exactly the price you’re paying for the fund.

ETFs: https://medicalexecutivepost.com/2025/01/06/etfs-alternatively-weighted-investments/

INDEX FUNDS: Index funds mirror the performance of benchmarks like the DJIA. These passive investments are an unimaginative way to invest. Passive index funds tracking market benchmarks accounted for just 21% of the U.S. equity fund market in 2012. By 2024, passive index funds had grown to about half of all U.S. fund assets. This rise of passive funds has come as they often outperform their actively managed peers. According to the widely followed S&P Indices Versus Active (SPIVA) scorecards, about 9 out of 10 actively managed funds didn’t match the returns of the S&P 500 benchmark in the past 15 years.

ASSESSMENT

Investing in individual stocks is psychologically and academically different than investing in the above funds, according to psychiatrist and colleague Ken Shubin-Stein MD, MPH, MS, CFA who is a professor of finance at the Columbia University Graduate School of Business When you buy shares of a company, you are putting all your eggs in one basket. If the company does well, your investment will go up in value. If the company does poorly, your investment will go down. Fund diversification helps reduce this risk.

CONCLUSION

Investing in the above fund types will help mitigate single company security risk.

References:

1. Fenton, Charles, F: Non-Disclosure Agreements and Physician Restrictive Covenants. In, Marcinko, DE and Hetico, HR: Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™]. Productivity Press, New York, 2015.

Readings:

1. Marcinko, DE and Hetico, HR; Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™] Productivity Press, New York, 2017

2. Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, NY 2006

3. https://www.ft.com

4. Shubin-Stein, Kenneth: Unifying the Psychological and Financial Planning Divide [Holistic Life Planning, Behavioral Economics, Trading Addiction and the Art of Money]. Marcinko, DE and Hetico, HR; Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™] Productivity Press, New York, 2017

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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

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MARCINKO ASSOCIATES: How our Second Investment Portfolio Opinions are Different?

Posted on June 13, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.MarcinkoAssociates.com

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We make second investment portfolio opinions affordable

Approximately 1 million allopathic physicians, 150,000 dentists, 200,000 osteopaths, 15,000 podiatrists and 6 million nurses often find it difficult to get an unbiased and fiduciary second opinion on their retirement or brokerage accounts. By offering second opinions for a flat fee, the monetary barriers that prevented colleagues from receiving a second opinion in the past have been removed.

We make second investment portfolio opinions convenient

Here’s how we work: you book an initial appointment with us, answer a few preliminary questions and email us your portfolio information. We then provide a second opinion. It is then up to you to incorporate or not.

INVESTMENT ADVISORY: https://medicalexecutivepost.com/2025/05/04/investment-advisory-portfolio-second-opinions-for-physician-colleagues/

We make second investment portfolio opinions timely

Financial markets, jobs and colleague age change like the weather. It is not always okay to wait a week, year or more, to seek a professional second financial portfolio opinion. You need to receive an opinion now. That’s where we come in. We are standing by, ready to take your email [MarcinkoAdvisors@outlook.com] and schedule a free initial consultation within two or three days, or less.

ASSET ALLOCATION: https://medicalexecutivepost.com/2024/10/23/musings-on-a-famous-portfolio-asset-allocation-study-3/

We make second investment portfolio opinions accurate

Fiduciary and non-sales orientated second opinions have the power to change financial lives in the long term. We’ve seen it happen many times. What characterizes a good second opinion? Three things: the opinion must be individualized to your investment portfolio[s], informed and results-oriented. That’s the informed fiduciary approach we take. We are colleagues and look forward to working with you.

PORTFOLIO MANAGEMENT: https://medicalexecutivepost.com/2025/05/27/physicians-personal-portfolio-management/

CONTACT: Ann Miller RN MHA CPHQ: Email: MarcinkoAdvisors@outlook.com

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Simplifying the Investment Decision

Posted on June 12, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

A Basic Overview for Emerging Physician and Medical Professional Investors

By Somnath Basu; PhD, MBA

There are three basic considerations in any investment decision.

1] The first is the understanding of the investment objective or why the investment is being made. While this may seem somewhat irrelevant at first – why would you be investing if you do not know what you are doing – combining investment objectives can pose problems down-stream.

For example, if you are saving for your retirement so that you can afford the retirement lifestyle you desire (the investment objective), your saving plan should not include any savings you are making for your children’s education (a separate investment objective). Compounding the two savings streams in one plan can very easily lead to one or both of the plans failing.

2] The second consideration is the time horizon of the investment. As a rough guide, investments that need to mature in the next 5-7 years can be considered as short term, 8-15 years as medium term and the rest as long term.

3] Finally, and probably the most important consideration of all is the importance you attach (priority) to achieving your investment objective; in other words, how safe and secure should your investments be. For example, if you are 70 years old and considering how you should invest your retirement funds so that your expenses are covered say for the next 25 years, you do not want a large margin of error in how your investments turn out; you can ill afford to be broke when you are older and hence you want your investments to be as secure as possible.

On the other hand, if the investment is for a second home or a boat, for example, you may wish to engage in some risk taking which may help in lowering your upfront investment needs. It is very important for any investor to clearly understand how much loss they can bear from any investment decision.

Decision Matrix

It is useful to express the investment framework described above as a simple decision matrix. Using the matrix (shown below) as a decision support system should clarify and simplify most investment decisions.

Link: Investment Scenarios

Understanding where in the matrix your decision falls is a very good first step of your decision. Both these elements (safety and time) will ultimately decide the kinds of financial instruments that will reside in your portfolio. We will examine the structure of each of the 9 possible combinations shown in the matrix. Before doing so, let us start by examining the various investment alternatives (e.g. stocks, bonds, etc.) since they have an implicit connection with the two dimensions portrayed in our matrix.

Stocks

Stocks are the most well known and popular form of financial investments. Stocks may be further segregated between large cap and small cap stocks, where the term “cap” is surrogate for the size of the underlying corporation or firm.

Stocks may represent investments in both domestic and international companies. Within the international category, stocks may represent corporations registered in developed (safer) or emerging (riskier) markets. In terms of our matrix dimensions, stocks are best suited when the decision is of medium or long term. In terms of safety, large cap (both domestic and international) stocks are the safest, while small cap and emerging market stocks are the most risky. The riskier the stock, the greater are the profit possibilities as are the chances of large losses.

Bonds

The second common type of investment are bonds Generally, bonds are much safer than stocks with the exception of a class of bonds known as high yield (or junk) bonds. Bonds are issued by companies, governments (domestic and international) and other agencies such as local governments (municipal bonds or “munis” which are especially desirable for those in high income tax rate categories) and quasi-government agencies such as Federal Home Loan Bank, Student Loan Administration, Agricultural Cooperative Banks, etc (collectively known as “Agency” bonds such as Ginnie/Fannie/Sallie Mae, Freddie Mac, etc.).

Government bonds are the safest, followed by agency and municipal bonds and then by bonds issues by corporations.

Corporate bonds may be safe (which are assigned credit safety ratings such as AAA, AA, BBB, etc.) or risky (junk bonds with ratings such as BB, CCC, CC etc.).

Bonds can be used for all time horizons, their maturities ranging from 3 months to 30 years. Very short term bond and bond like instruments (with maturities of one year or less) are known as money market securities which are generally safer than most other investments.

Alternate Investments

Other types of investments include real estate (long term, risky), commodities (such as energy, basic building materials, precious metals, etc.) which are also risky and which may be used for both short term and long term purposes and provide a good hedge (counter balance) in an inflationary environment, derivatives (options and futures) which are very risky and typically short term in nature. Derivatives are generally suggested for very sophisticated investors and are best left alone otherwise.

Risk Reduction

A very important feature about investments is that when various types of investments are bundled together in a portfolio, they help to reduce the risk of the investment decision without affecting the profits in a comparable way. This basic aspect of mixing various kinds of investments (stocks, bonds, etc) to reduce risk is known as diversification and it is a “must” for any investment portfolio. It is a “must” because this technique of risk reduction is generally costless (unless you are paying a financial advisor to do this for you) and it is very worthwhile. All other methods of risk reduction have cost implications.

Scenario Matrix

Armed with this nomenclature regarding various investment types we can now go about examining what the 9 combination (Scenario) portfolios may look like for investment purposes.

Link: Investment Scenarios

Starting with Scenario 1, if you wish to make a short term decision that is very important to you and needs to be very safe, investments should be made in very short term bonds (government or treasury bills)and other similar money market (short term, safe) securities. International short term bonds of developed countries may also be included. Such investment products are generally available through mutual funds or Exchange Traded Funds (or ETFs). ETFs are just like mutual funds except that they are usually cheaper, much easier to buy and sell and may provide tax deferral benefits.

If your investment falls in the Scenario 2 category, include agency/municipal bonds as well as some domestic and international (developed country) large cap stocks while for Scenario 3, smaller portions of small cap and emerging market stocks may be added proportionately while reducing some of the safer investments.

If your investment was a Scenario 4 type of investment, corporate large cap stocks (both domestic and international) could be added to agency or corporate (domestic and international) bonds. Before investing in stocks (in any Scenario) for this Scenario 4, a good question to ask is the following: how profitable were stock investments in the last 3-5 years? If the answer is “very profitable” then reduce the proportion of stocks as compared to bonds in the portfolio. If the last few years were not good, then it would be good to increase their comparable shares. The main reason for this “fine tuning” is that the fortunes of stocks (and many other types of investments) follow a cyclical pattern and the cycle is related to the general cycle of economic (GDP) growth and contraction.

It can be seen now how Scenarios 5 and 6 (as also 8 and 9) will follow a similar pattern as before, increasing proportionally in stocks (of all sizes, domestic/international), real estate, commodities, etc. Portfolios falling in these groups may also include some small cap and emerging market stocks as well as high yield or junk bonds. The proportion of these riskier investments would of course be higher for Scenario 6 over Scenario 5 (and Scenario 9 over 8).

For Scenario 7, the investment portfolio would typically resemble one that would be like an opposite of the portfolio in Scenario 1 and would include a greater proportion of large cap (domestic/international) stocks and a much smaller proportion of bonds. As we move towards Scenarios 8 and 9, the portfolios would be dominated by small cap and emerging market stocks as well as junk bonds.

Assessment

In the discussion above, I have tried to generalize the investment decision in a simplifying way. While the discussion may have centered more on stocks and bonds, it is important to note that all portfolios must “diversify” the investment risks by expanding upon the various types of investment products contained in the portfolios. The very fact that a portfolio contains various types of investments will ensure that the portfolio will perform better than those which are not as well diversified. This will be so in spite of any one of the investment types underperforming at any point in time and the diversification benefit will be received consistently over long periods of time. A popular analogy to this diversification benefit is the common phrase of not putting all eggs in one basket.

Editor’s Note: Somnath Basu PhD is program director of the California Institute of Finance in the School of Business at California Lutheran University where he’s also a professor of finance. He can be reached at (805) 493 3980 or basu@callutheran.edu

Conclusion

The above approach to investment decision-making can be considered as a basic template that can be used universally. For those seeking greater sophistication and who have a foundation built on the above model, expert advice is strongly recommended.

And so, your thoughts and comments on this ME-P are appreciated. Financial advisors please chime in on the debate? Is Basu correct; why or why not? Review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

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Filed under: "Ask-an-Advisor", Investing, Portfolio Management | Tagged: Basu, bonds, ETFs, finance, Investing, Mutual Funds, Portfolio Management, stocks | 3 Comments »

INVESTING: Stocks, Bonds & Oil Updates

Posted on June 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

Generated by AI

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Stocks: The S&P 500 touched 6,000 points for the first time since February and wrapped up its fifth positive week in the past seven following a better-than-expected jobs report. The vibes got even better in the afternoon following a President Trump announcement that the US and China trade teams will meet in London on Monday. STOCKS: https://medicalexecutivepost.com/2025/04/18/stocks-basic-definitions/
Bonds: Treasury yields ticked up in response to the solid May jobs report, a sign that investors were reducing bets on the scale of rate cuts this year. That’s not what Trump wants to hear: He urged Fed Chair Jerome Powell to slash interest rates by a jumbo-sized full point to pour “rocket fuel” on the economy. REVENUE BONDS: https://medicalexecutivepost.com/2024/12/20/bonds-revenue/
Oil: Oil prices have gone sideways for three straight weeks now, trading within a $4 range around $65/barrel since the middle of May. We’ll let you know when something interesting happens. CRUDE OIL: https://medicalexecutivepost.com/2024/08/14/wti-crude-oil/

EDUCATION: Books

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REVERSAL OF FORTUNE: For E.S.G. Investors?

Posted on June 5, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

Environmental, Social and Governance Investing

SPONSOR: http://www.MarcinkoAssociates.com

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An Informed Op-Ed Piece

By Dr. David Edward Marcinko; MBA MEd

As many medical, dental and podiatric colleagues are aware, Environmental, Social and Governance (ESG) investing refers to a set of standards for a company’s behavior used by socially conscious investors to screen potential investments. Over the last decade, or so, I have seen many investors pursing this laudable aim.

Yet, more than 80% of private equity fund managers have now stepped away from at least one deal due to ESG concerns, according to the 2023 BDO Private Capital Survey. The reasons are complex, and point towards fund managers’ sentiment towards risk-reward in the current economic environment.

This retreat from ESG is due to backlash from conservatives who are critical of the idea that mutual fund managers should be considering any other factor but a company’s share holders in their investment decisions. Accusations of “Greenwashing” have also plagued many ESG funds, which is when an asset management firm charging higher fees or a specific thematic fund without actually delivering a unique investment strategic competitive advantage.

Greenwashing is the process of conveying a false impression or misleading information about how a company’s products are environmentally sound. Greenwashing involves making an unsubstantiated claim to deceive consumers and / or investors into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do. Greenwashing may also occur when a company attempts to emphasize sustainable aspects of a product to overshadow the company’s involvement in environmentally damaging practices.

ESG: https://medicalexecutivepost.com/2023/09/23/mas-and-esg-profit/

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According to internationally known linguistics and cognitive science Professor, Mackenzie Hope Marcinko PhD of the University of Delaware, greenwashing is performed through the use of environmental imagery, misleading labels, cognitive biases and tendencies hiding tradeoffs. Greenwashing is also a play on the term “Whitewashing,” which means using false information to intentionally hide wrongdoing, errors or an unpleasant situation in an attempt to make it seem less bad than it really is.

To be sure, uncertainty around ESG regulations in the USA is leading financial deal makers to tread carefully. For example, Jim Clayton MBA, a private equity advisor also from the University of Delaware recently stated:

“We’re a year past when the SEC said they were going to issue ESG reporting standards for public filers which has created more noise in the system.”

“People are nervous about what I would call ESG-intense exposed industries, in other words, those with “heavy carbon footprints”.

MORE ESG: https://medicalexecutivepost.com/2023/03/27/on-socially-responsible-investing-2/

And, a federal judge in Texas said that American Airlines violated federal law by basing investment decisions for its employee retirement plan on environmental, social, and other non-financial factors. The ruling in January 2025 by US District Judge Reed O’Connor appeared to be the first of its kind amid growing backlash by conservatives to an uptick in socially-conscious investing. O’Connor said American had breached its legal duty to make investment decisions based solely on the financial interests of 401(k) plan beneficiaries by allowing BlackRock, its asset manager and a major shareholder, to focus on environmental, social and corporate governance (ESG) factors.

Even the State of Florida pulled $2 billion from the investment management firm BlackRock in the largest divestment ever made. Florida Governor Ron DeSantis claimed that by taking ESG standards into account when making investment decisions, the firm isn’t prioritizing the financial bottom line for Floridians.

Assessment

But, for a few years at least, things were indeed good. In 2020 and 2021, ESG funds outperformed the market by ~4.3%.

Conclusion

So, always remember [caveat emptor]: let the buyer beware!

References and Readings:

1. 2023 BDO Private Capital Survey: https://insights.bdo.com/2023-BDO-Private-Capital-Survey.html

2. Marcinko, DE; Comprehensive Financial Planning Strategies for Doctors and Advisors [Best Practices from Leading Consultants and Certified Medical Planners™] Productivity Press, New York, 2017

3. Marcinko, DE: Dictionary of Health Economics and Finance. Springer Publishing Company, NY 2006.

4. Zymeri, Jeff: ‘Not Going to Fly Here’ [DeSantis Signs Far-Reaching Anti-ESG Bill into Law]. 2023: https://www.yahoo.com/news/not-going-fly-desantis-signs-121648679.html

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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: MarcinkoAdvisors@outlook.com

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Filed under: "Ask-an-Advisor", Ethics, iMBA, Inc., Investing, Portfolio Management, Touring with Marcinko | Tagged: BDO, BlackRock, DeSantis, environment, environmental, ESG, finance, green washing, Investing, Jim Clayton, Marcinko, Portfolio Management, reed OConnor, SEC, Social and Governance, sustainability, white washing | Leave a comment »

PHYSICIANS: Personal Portfolio Management?

Posted on May 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

BY DR. DAVID EDWARD MARCINKO; MBA MEd CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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SPONSOR: http://www.MarcinkoAssociates.com

Most individual physician portfolios are simply a list of stocks. Doctors with such lists usually know the cost of each position and when they acquired it. It is not unusual to find inherited low cost stocks in the account that have been held for many years.

When you inherit securities, a new cost basis is established (the price of the stock on the date of death or six months later—the executor of the estate makes this determination). Even though there would be no capital gain liability if the stock were sold immediately after date of death, most people simply don’t do anything, just hold the stock. Of course taxes should be considered when selling securities but the investment merit should be the overriding factor.

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Doctor and Accountant Opinions

In a personal communication, Mr. L. Eddie Dutton, CPA said, “First make an investment decision and if it fits into the tax plan, so much the better. Doctors often wonder where they will get the money to pay the taxes. I say to get it from the sale of the appreciated stock and cry all the way to the bank with your profit.”

Dr. Ernest Duty MD, a very successful private investor advises “Ask yourself this question: If you had the money instead of the stock, would you buy the stock? If your answer is ‘Yes’ then, hold on to the stock but if you say ‘No, I wouldn’t buy that stock today’ then, sell it” [personal communication].

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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: E-MAIL CONTACT: MarcinkoAdvisors@outlook.com

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Stock Markets Up Slightly, Recession Still Possible as Oil Tumbles

Posted on May 16, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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Markets started the day down yesterday but regained lost ground throughout the afternoon as investors decided that any day with no new tariff announcements is a good day.
Be advised: Fed Chair Jerome Powell warned that “supply shocks” pose a challenge for the economy, and that interest rates may need to remain higher for longer. Meanwhile, JPMorgan Chase CEO Jamie Dimon said a recession is still on the table.
Oil took a tumble on comments by President Trump that the US is nearing a deal with Iran over its nuclear program that could lift sanctions against the country.

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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: MarcinkoAdvisors@outlook.com

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Filed under: "Ask-an-Advisor", Breaking News, Financial Planning, Information Technology, Investing, Marcinko Associates, Portfolio Management | Tagged: Dimon, Federal Reserve, FOMC, inflation, Iran, JPMorgan Chase, Marcinko, oil, Portfolio Management, Powell, stock markets, tariffs, Trump | Leave a comment »

Stocks and Alternative Investments

Posted on May 12, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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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.

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VALUE INVESTING: Lesson from the Blackjack Table

Posted on May 5, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Vitaliy Katsenelson CFA

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“Any time you make a bet with the best of it, where the odds are in your favor, you have earned something on that bet, whether you actually win or lose the bet. By the same token, when you make a bet with the worst of it, where the odds are not in your favor, you have lost something, whether you actually win or lose the bet.”

– David Sklansky, The Theory of Poker

Over a lifetime, active investors will make hundreds, often thousands of investment decisions. Not all of those decisions will work out for the better. Some will lose and some will make us money. As humans we tend to focus on the outcome of the decision rather than on the process.

On a behavioral level, this makes sense. The outcome is binary to us – good or bad, we can observe with ease. But the process is more complex and is often hidden from us.

One of two things (sometimes a bit of both) can unite great investors: process and randomness (luck). Unfortunately, there is not much we can learn from randomness, as it has no predictive power. But the process we should study and learn from. To be a successful investor, all you need is a successful process and the ability (or mental strength) to stick to it.

Several years ago, I was on a business trip. I had some time to kill so I went to a casino to play blackjack. Aware that the odds were stacked against me, I set a $40 limit on how much I was willing to lose in the game.

I figured a couple hours of entertainment, plus the free drinks provided by the casino, were worth it. I was never a big gambler (as I never won much). However, several days before the trip I had picked up a book on blackjack on the deep discount rack in a local bookstore. All the dos and don’ts from the book were still fresh in my head. I figured if I played my cards right I would minimize the house advantage from 2-3 per cent to 0.5 per cent.

Wanting to get as much mileage out of my $40 as possible, I found a table with the smallest minimum bet requirement. My thinking was that the smaller the hands I played, the more time it would take for the casino’s advantage to catch up with me and take my money.

I joined a table that was dominated by a rowdy, half-drunken blue-collar worker who told me several times that it was his payday (literally: he was holding a stack of $100 bills in his hand) and that he was winning. I played by the book. But it did not matter. Luck was not on my side and my $40 was thinning with every hand.

Meanwhile, the rowdy guy was making every wrong move. He would ask for an extra card when he had a hard 18 while the dealer showed 6. The next card he drew would be a 3, giving him 21. Then the dealer would get a 10 and then a 2 (on top of the 6 that already showed), leaving him with 18. The rowdy guy barely paid attention to the cards.

He was more interested in saying “hit me”.

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Filed under: "Ask-an-Advisor", Experts Invited, Financial Planning, Investing, Portfolio Management | Tagged: betting, blackjack, gamble, gambling, gaming, poker, Portfolio Management, value investing, value stocks, Vitaliy Katsenelson CFA | 1 Comment »

QUANTUM COMPUTING: Healthcare and Banking Affected [B-QTUM Index Fund]

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.

Citation and Disclosure: https://www.defianceetfs.com/qtum/

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Filed under: Drugs and Pharma, Experts Invited, Financial Planning, Funding Basics, Glossary Terms, Information Technology, Investing | Tagged: banking, bits, BlueStar, BQTUM, bytes, Drugs, ETFs, exchange traded funds, finance, healthcare, HIT, Investing, IT, Machine Learning, Mutual Funds, personal-finance, Portfolio Management, QTUM, Quantum Computiog, qubits, stocks, Technology | Leave a comment »

ZWEIG BREADTH THRUST: A Stock Indicator

Posted on April 29, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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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.

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Filed under: "Ask-an-Advisor", Financial Planning, Investing, Portfolio Management | Tagged: business, Carson Research, finance, Investing, martin zweig, Portfolio Management, Ryan Detrick, stock market, stocks, Zweig Breadth Thrust, Zweig Index, ZweigThrust | Leave a comment »

FOURTH MARKET: Private Security Transactions

Posted on April 27, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

DEFINITIONS

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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The Fourth Market?

The fourth market is defined as private transactions made directly between large medical investors, institutions such as banks, mutual funds, and insurance companies, without the use of a securities firm. In other words, fourth market trading is usually one institution swapping securities in its portfolio with another large institution.

From the stock broker’s viewpoint, there is one problem with the fourth market. Since no broker/dealer is involved, no registered representative is involved and there is no commission to be earned. These trades are reported on a system called Instinet.

This is advantageous to larger medical foundations or institutional investors.

What Is Instinet?

Instinet is a global financial securities service that operates an electronic securities order matching, trading, and information system which allows members, primarily institutional traders, and investors, to display bids and offer quotes for stocks, and conduct transactions with each other.

Instinet is an example of a dark pool of liquidity, a private exchange for trading securities that is not accessible by the investing public. The name implies a lack of transparency. and it facilitates block trading by institutional investors who do not wish to impact the markets with their large orders.

According to the SEC, there were 74 registered Alternative Trading Systems, or dark pools, as of February 2024.

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Filed under: "Ask-an-Advisor", Alternative Investments, CMP Program, Funding Basics, Investing, Portfolio Management | Tagged: alternate trading systems, CMP, dark pools, fourth market, instinet, portfolio, Portfolio Management, private transactions, securities, stock transactions | Leave a comment »

The DOCTOR EFFECT

Posted on April 21, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

Dr. David Edward Marcinko; MBA MEd CMP™

Medical Colleagues Beware the Advisors

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SPONSOR: http://www.MarcinkoAssociates.com

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.

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: MarcinkoAdvisors@outlook.com

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Filed under: "Doctors Only", CMP Program, Ethics, Financial Advisor Listings, Financial Planning, Funding Basics, Investing, LifeStyle, Marcinko Associates, Portfolio Management, Touring with Marcinko | Tagged: agents, budgeting, certified medical planner, CFP, CMP, DO, DPM, finance, financial advisors, financial planners, Financial Planning, insurance, Investing, Marcinko, MD, personal-finance, Portfolio Management, RN | Leave a comment »

STOCKS: Basic Definitions

Posted on April 18, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

SPONSOR: http://www.MarcinkoAssociates.com

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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.

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Few Stocks UP with Many Stocks DOWN

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.
American Express fell 0.64% even though the credit card company beat Wall Street’s expectations last quarter.
Global Payments tumbled 17.43% after the payment processor announced a $24 billion acquisition of competitor Worldpay.

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Very Few Stocks UP but Many Stocks DOWN

Posted on April 17, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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🟢 What’s up

Hertz Global soared 56.44% on the news that Bill Ackman’s Pershing Square Capital has taken a $46.5 million stake in the rental car company.
Travelers Cos. rose 1.13% in spite of massive losses from California wildfires, which didn’t hurt the insurer’s bottom line as badly as Wall Street feared.
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 Brokers Group 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 Hunt Transport 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.

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STOCK MARKET: Update

Posted on April 15, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Stocks kept the good vibes going for a second trading day yesterday with tech companies like Apple rising as investors reacted to the weekend’s news that smartphones and computers would be temporarily exempt from “reciprocal” tariffs—at least until new semiconductor tariffs are imposed.

Car companies also jumped after President Trump suggested he wanted to “help” as automakers try to transition their production to the US in the face of 25% auto tariffs.

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BLACK MONDAY REDEUX: Interesting Day or Financial Crisis?

Posted on April 7, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

BILL ACKMAN versus JIM KRAMER

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Interesting Day?

Markets: Last week’s market bloodbath will go down in the history books. The S&P 500’s 10% plunge on Thursday and Friday, after President Trump announced massive tariffs, ranks among the steepest two-day decline in the last 70 years, on par with Black Monday in 1987, the post-Lehman Brothers rout in 2008, and the Covid plunge in March 2020. More than $6 trillion was wiped out from stocks over two days, and the NASDAQ entered a bear market, down 20% from a previous high.

Trading restarted at 9:30 am ET for what Bill Ackman predicts will be “one of the more interesting days in our country’s economic history.”

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Monday Crash?

On the other hand, CNBC host and market commentator Jim Cramer just warned that America is in store for another “Black Monday” market crash similar to the record 1987 collapse if President Trump doesn’t curtail his tariff plan.

Cramer — who noted that the 1987 crash saw the Dow Jones Industrial Average fall by 22.6% in a single day — said the bloodbath could be repeated after the brutal two-day sell-off following the announcement of Trump’s sweeping tariffs against nearly 90 countries.

If the president doesn’t try to reach out and reward these countries and companies that play by the rules, then the 1987 scenario … the one where we went down three days and then down 22% on Monday, has the most cogency,” Cramer said on his show Saturday, referencing the worst single-day fall in the history of the Dow.

QUESTION: Who is correct; Ackman or Cramer?

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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/

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: MarcinkoAdvisors@outlook.com

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OBTAIN: An Unbiased Second Financial Planning Opinion

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.

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http://www.MARCINKOASSOCIATES.com

E-mail CONTACT: MarcinkoAdvisors@outlook.com

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How to Invest When There’s Nowhere to Hide

Posted on March 10, 2025 by Dr. David Edward Marcinko MBA MEd CMP™

By Vitaliy Katsenelson; CFA

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How to Invest When There’s Nowhere to Hide

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.

This is why what we do at IMA is so important.

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.

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

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

By Vitaliy Katsenelson CFA

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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OPINIONS: Secure Unbiased Financial Planning -or- Economic Practice Management Advice

Posted on October 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Dr. David Edward Marcinko MBA MEd CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

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CONTACT: Ann Miller RN MHA CMP®

EMAIL: MarcinkoAdvisors@msn.com

***

2nd OP

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ADVICE: Financial, Investment or Medical Practice Management Second Fiduciary Opinions

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

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MARCINKO & ASSOCIATES, Inc.

SPONSOR: http://www.MARCINKOASSOCIATES.com

Dr. David Edward Marcinko MBA MEd CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

***

CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

***

2nd OPINIONS

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Musings on “Sector” Mutual Funds

Posted on August 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

A Historical Review

By Dr. David Edward Marcinko MBA, MEd, CMP™

www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Although less than 5-10% of the total number of mutual funds are considered true sector funds, year after year, 40-50% or more of the top-performing funds have been sector funds. However, for some physician investors sold on a buy-and-hold strategy, sector funds may not be their cup of tea. But, sector funds do offer an opportunity to outperform the market indices, possibly even substantially, according to Marshall Schield in “Developing a Sector Funds Strategy” (Personal Financial Planning, November/December 1996, pp. 39–42, Warren, Gorham & Lamont, [800] 950-1205).

A Volatile Strategy

Typically sector funds are more volatile than the majority of growth funds. This volatility springs from: (1) the fact that the majority of stocks in a particular sector fund move together, thereby magnifying the fund’s movement; (2) the focus of the sector fund manager only on stocks in that sector, enabling him or her to target high potential stocks; and (3) the rotation of “in” and “out” sectors at particular times.

So – What’s a Doctor Investor to Do?

An investor in sector funds needs a strategy that will target sectors on the upswing and signal when to move out of declining funds. When selecting sector funds, Schield recommends building a list of funds that are manageable, full of choices in all types of markets, diversified (three to four funds for an aggressive portfolio or 10–12 for a less aggressive approach) and liquid.

The Balancing Act

Also, develop a healthy balance—not a “hit-or-miss” approach. Schield suggested using the “relative strength” approach for sector selection by computing the percent change in the price of funds over a certain number of days and then ranking them for short-term, intermediate, and long-term periods. With respect to determining the proper timing for buying or selling, the author suggests the use of an individual fund timing system, such as comparing the current NAV of the sector against a moving average for 50 or 75 days or combining both short- and long-term moving averages.

Simplicity Rules

In creating buy-and-sell signals:

Keep it simple and manageable.
Do not look for perfection.
Practice patience.
Cut losses and let profits run.
Stick with your relative strength.
Buy/sell signals consistently.

Assessment

Most of all; be prepared to spend and invest the time necessary to be successful. But, have you or your sector funds been successful in the last decade, or so? If so, which sectors? Please opine?’

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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

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SECOND OPINIONS: Secure Investment Advisory -OR- Medical Practice Management Advice

Posted on July 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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MARCINKO & ASSOCIATES, Inc.

Dr. David Edward Marcinko MBA MEd CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY CONSULTATIONS

***

CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

***

2nd OP

Filed under: "Ask-an-Advisor", "Doctors Only", Alternative Investments, Career Development, CMP Program, Ethics, Financial Advisor Listings, Financial Planning, iMBA, Inc., Investing, LifeStyle, Managed Care, Marketing & Advertising, Portfolio Management, Practice Management, Practice Worth, Touring with Marcinko | Tagged: acquisitions, David Edward Marcinko, fiduciary, Financial Planning, Investing, mergers, Portfolio Management, retirement planning | Leave a comment »

Are We Over-Optimizing Portfolio Asset Classes?

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

Too Many Other Asset Classes?

SPONSOR: http://www.MarcinkoAssociates.com

[By Dr. David Edward Marcinko MBA MEd CMP™]

Some financial analysts believe that the focus on asset classes may have gone too far as physicians and other investors have sought to “over optimize” their portfolios.

In fact, colleague David Loeper, CEO of Wealthcare Capital Management, explained this concept as follows:

“Where things have really got off track has been the insistence on breaking asset classes into sub-classes by style, market capitalization, etc. The unpredictability of all the inputs into our optimizers, even over long periods of time, has been ignored. We have attempted to take efficient portfolios of stocks, bonds and cash and make them even more efficient by breaking the unpredictable asset classes into even less predictable sub-classes. This has all been done into the pursuit of “efficiency” as the proposal was validated by the Brinson & Beebower study, which purports to find that over 90% of the investment return variance is explained by asset allocation. The risk that you produce inefficient portfolios INCREASES if you increase the number of “asset classes” for which you must forecast not only the risk and returns but also each asset class’ correlation to the others.”

Assessment

If true, and I think it is a valid point, the results of the optimizer and your resulting portfolio’s efficiency is based on the accuracy of the inputs and NOT THE NUMBER OF THE INPUTS.

Or, is this like the TNTC situation in cell cultures and microbiology [Too Numerous To Count].

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

Filed under: Experts Invited, Financial Planning, Investing, Marcinko Associates | Tagged: asset allocation, asset classes, David Loeper, Marcinko, Modern Portfolio Theory, Portfolio Management | 3 Comments »

Modern Portfolio Theory and Asset Allocation [Not Correlation]

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

THE CORRELATION HOT TOPIC

SPONSOR: http://www.MarcinkoAssociates.com

By Dr. David Edward Marcinko MBA CMP©

SPONSOR: http://www.CertifiedMedicalPlanner.org

Modern Portfolio Theory approaches investing by examining the complete market and the full economy. MPT places a great emphasis on the correlation between investments.

DEFINITION:

Correlation is a measure of how frequently one event tends to happen when another event happens. High positive correlation means two events usually happen together – high SAT scores and getting through college for instance. High negative correlation means two events tend not to happen together – high SATs and a poor grade record.

No correlation means the two events are independent of one another. In statistical terms two events that are perfectly correlated have a “correlation coefficient” of 1; two events that are perfectly negatively correlated have a correlation coefficient of -1; and two events that have zero correlation have a coefficient of 0.

Correlation has been used over the past twenty years by institutions and financial advisors to assemble portfolios of moderate risk. In calculating correlation, a statistician would examine the possibility of two events happening together, namely:

If the probability of A happening is 1/X;
And the probability of B happening is 1/Y; then
The probability of A and B happening together is (1/X) times (1/Y), or 1/(X times Y).

There are several laws of correlation including;

Combining assets with a perfect positive correlation offers no reduction in portfolio risk. These two assets will simply move in tandem with each other.
Combining assets with zero correlation (statistically independent) reduces the risk of the portfolio. If more assets with uncorrelated returns are added to the portfolio, significant risk reduction can be achieved.
Combing assets with a perfect negative correlation could eliminate risk entirely. This is the principle with “hedging strategies”. These strategies are discussed later in the book.

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

BUT – CORRELATION IS NOT CAUSATION

https://medicalexecutivepost.com/2021/02/05/correlation-is-not-causation/

In the real world, negative correlations are very rare

Most assets maintain a positive correlation with each other. The goal of a prudent investor is to assemble a portfolio that contains uncorrelated assets. When a portfolio contains assets that possess low correlations, the upward movement of one asset class will help offset the downward movement of another. This is especially important when economic and market conditions change.

As a result, including assets in your portfolio that are not highly correlated will reduce the overall volatility (as measured by standard deviation) and may also increase long-term investment returns. This is the primary argument for including dissimilar asset classes in your portfolio. Keep in mind that this type of diversification does not guarantee you will avoid a loss. It simply minimizes the chance of loss.

In the table provided by Ibbotson, the average correlation between the five major asset classes is displayed. The lowest correlation is between the U.S. Treasury Bonds and the EAFE (international stocks). The highest correlation is between the S&P 500 and the EAFE; 0.77 or 77 percent. This signifies a prominent level of correlation that has grown even larger during this decade. Low correlations within the table appear most with U.S. Treasury Bills.

Historical Correlation of Asset Classes

Benchmark 1 2 3 4 5 6

1 U.S. Treasury Bill 1.00

2 U.S. Bonds 0.73 1.00

3 S&P 500 0.03 0.34 1.00

4 Commodities 0.15 0.04 0.08 1.00

5 International Stocks -0.13 -0.31 0.77 0.14 1.00

6 Real Estate 0.11 0.43 0.81 -0.02 0.66 1.00

Table Source: Ibbotson 1980-2012

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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FIDUCIARY OPINIONS: Secure Investment Advisory -OR- Medical Practice Management Advice

Posted on June 21, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

***

MARCINKO & ASSOCIATES, Inc.

Dr. David Edward Marcinko MBA CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

FINANCIAL PLANNING

CAREER DEVELOPMENT

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MERGERS AND ACQUISITIONS

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RETIREMENT PLANNING

FEE-ONLY

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CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

***

https://medicalexecutivepost.com/schedule-a-consultation/

Filed under: "Ask-an-Advisor", "Doctors Only", Alternative Investments, Career Development, CMP Program, Ethics, Financial Advisor Listings, Financial Planning, iMBA, Inc., Investing, LifeStyle, Managed Care, Marketing & Advertising, Portfolio Management, Practice Management, Practice Worth, Touring with Marcinko | Tagged: acquisitions, David Edward Marcinko, fiduciary, Financial Planning, Investing, mergers, Portfolio Management, retirement planning | Leave a comment »

FIDUCIARY: Obtain an Unbiased 2nd Financial Advisory -or- Economic Practice Management Opinion

Posted on June 1, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

***

Dr. David Edward Marcinko MBA CMP®

Certified Medical Planner®

SPONSOR: http://www.CertifiedMedicalPlanner.org

***

FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

FEE-ONLY

***

CONTACT: Ann Miller RN MHA

EMAIL: MarcinkoAdvisors@msn.com

***

2nd OP

Filed under: "Ask-an-Advisor", "Doctors Only", Alternative Investments, Career Development, CMP Program, Ethics, Financial Advisor Listings, Financial Planning, iMBA, Inc., Investing, LifeStyle, Managed Care, Marketing & Advertising, Portfolio Management, Practice Management, Practice Worth, Touring with Marcinko | Tagged: acquisitions, David Edward Marcinko, fiduciary, Financial Planning, Investing, mergers, Portfolio Management, retirement planning | Leave a comment »

Modern Portfolio Theory and Asset Allocation [Not Correlation]

Posted on May 21, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

THE CORRELATION HOT TOPIC

SPONSOR: http://www.CertifiedMedicalPlanner.org

Modern Portfolio Theory approaches investing by examining the complete market and the full economy. MPT places a great emphasis on the correlation between investments.

DEFINITION:

If the probability of A happening is 1/X;
And the probability of B happening is 1/Y; then
The probability of A and B happening together is (1/X) times (1/Y), or 1/(X times Y).

There are several laws of correlation including;

Combining assets with a perfect positive correlation offers no reduction in portfolio risk. These two assets will simply move in tandem with each other.
Combining assets with zero correlation (statistically independent) reduces the risk of the portfolio. If more assets with uncorrelated returns are added to the portfolio, significant risk reduction can be achieved.
Combing assets with a perfect negative correlation could eliminate risk entirely. This is the principle with “hedging strategies”. These strategies are discussed later in the book.

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

BUT – CORRELATION IS NOT CAUSATION

https://medicalexecutivepost.com/2021/02/05/correlation-is-not-causation/

In the real world, negative correlations are very rare

Historical Correlation of Asset Classes

Benchmark 1 2 3 4 5 6

1 U.S. Treasury Bill 1.00

2 U.S. Bonds 0.73 1.00

3 S&P 500 0.03 0.34 1.00

4 Commodities 0.15 0.04 0.08 1.00

5 International Stocks -0.13 -0.31 0.77 0.14 1.00

6 Real Estate 0.11 0.43 0.81 -0.02 0.66 1.00

Table Source: Ibbotson 1980-2012

ORDER Textbook: https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

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Thinking Beyond Portfolio Asset Allocation

Posted on June 14, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

Don’t Forget Your Spending Policy – Doctors

By Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

If you are economically literate – or read the ME-P regularly – you may be tired of hearing the familiar saw, “the single most important determinant of investment results over time is asset allocation.”

But, as most of us realize, this glosses over critical obstacles to building personal wealth—taxes, inflation, and spending policy. A doctor’s spending policy itself is as critical as asset allocation in preserving wealth, as well as for all investors who understand the trade-offs: there are both allocation and spending strategies that stand to preserve wealth and insulate against excessive equity risk at the same time.

Income versus Security

In proving his point a decade ago, the author—Roger Hertog in “Income Versus Security”— traced the growth of a $1 million portfolio during the period of 1960–1994. He showed that while an all-stock portfolio would have experienced a compound growth rate of 10.1%, an all-bond portfolio of 7.4%, and an all T-bill portfolio of 6.1%, these growth rates dropped to 8%, 5%, and 3.7%, respectively, after taxes and conservative transaction costs. When further reduced by inflation, they dropped to 3.1%, 0.2%, and -1%, respectively. Stocks still nearly tripled in real value after taxes.

Next, Hertog factored in spending. He showed that the greater the equity exposure, the more likely investors will preserve or increase their levels of real spending and wealth. Also, he demonstrated how a spending policy of a fixed percentage of the portfolio; or of spending all the income is ill-suited to estate building. He arrived at an optimum allocation of 60% stocks and 40% bonds with a policy of spending all stock dividends but only spending interest to the extent it exceeds inflation. This latter spending policy adjusts for the fact that in – unlike today but perhaps again in the near future – an inflationary environment a portion of bond interest is a return of principal. This type of asset allocation and spending policy resulted in the greatest amount of growth over the years and gained on inflation. Hertog contends that the 60/40 allocation provides an appealing combination of growth and protection.

IOW: It gives investors a milder ride.

Assessment

Over the 35-year period studied, a 60/40 mix returned almost as much as the all-stock portfolio both before taxes and after taxes and achieved some 75% of its real after-tax growth. Also, the portfolio’s worst year was only half as bad as the all-stock portfolio. Hertog believed that balancing with bonds softened the downside. But – what about the “flash-crash” of 2008-09?

Note: “Income Versus Security: Do You Have To Choose?” Roger Hertog, Trust & Estates, March 1997, pp. 44–62, Intertec Publishing Corporation.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Is the bull market in bonds over? Do you believe Hertog? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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Filed under: CMP Program, Investing, Portfolio Management | Tagged: asset allocation, david marcinko, Income versus Security, Portfolio Management, Roger Hertog | 7 Comments »

How [DOCTORS] Construct Investment Portfolios That Protect Them

Posted on June 12, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

***

“ASK AN ADVISOR“

***

By Vitaliy N. Katsenelson, CFA

***

Question: How do you construct investment portfolios and determine position sizes (weights) of individual stocks?

I wanted to discuss this topic for a long time, so here is a very in-depth answer.
CITE: https://www.r2library.com/Resource/Title/082610254

Answer
For a while in the value investing community the number of positions you held was akin to bragging on your manhood– the fewer positions you owned the more macho an investor you were. I remember meeting two investors at a value conference. At the time they had both had “walk on water” streaks of returns. One had a seven-stock portfolio, the other held three stocks. Sadly, the financial crisis humbled both – the three-stock guy suffered irreparable losses and went out of business (losing most of his clients’ money). The other, after living through a few incredibly difficult years and an investor exodus, is running a more diversified portfolio today.

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

On the other extreme, you have a mutual fund industry where it is common to see portfolios with hundreds of stocks (I am generalizing). There are many reasons for that. Mutual funds have an army of analysts who need to be kept busy; their voices need to be heard; and thus their stock picks need to find their way into the portfolio (there are a lot of internal politics in this portfolio). These portfolios are run against benchmarks; thus their construction starts to resemble Noah’s Ark, bringing on board a few animals (stocks) from each industry. Also, the size of the fund may limit its ability to buy large positions in small companies.

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

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

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

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

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

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

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

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

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

Our research process is very qualitative: We read annual reports, talk to competitors and ex-employees, build financial models, and debate stocks among ourselves and our research network. In our valuation analysis we try to kill the business – come up with worst-case fair value (where a company slips on multiple bananas) and reasonable fair value. We also assign a quality rating to each company in the portfolio. Quality is absolute for us – we don’t allow low-quality companies in, no matter how attractive the valuation is (though that doesn’t mean we don’t occasionally misjudge a company’s quality).

The same company, at different stock prices, will merit a higher or lower position size. In other words, if company A is worth (fair value) $100, at $60 it will be a 3% position and at $40 it will be a 5% position. Company B, of a lower quality than A but also worth $100, will be a 2% position at $60 and a 4% position at $40 (I just made up these numbers for illustration purposes). In other words, if there are two companies that have similar expected returns, but one is of higher quality than the other, our system will automatically allocate a larger percentage of the portfolio to the higher-quality company. If you repeat this exercise on a large number of stocks, you cannot but help to shift your portfolio to higher-quality, higher-return stocks. It’s a system of meritocracy where we marry quality and return.

Let’s talk about diversification. We don’t go out of our way to diversify the portfolio. At least, not in a traditional sense. We are not going to allocate 7% to mining stocks because that is the allocation in the index or they are negatively correlated to soft drink companies. (We don’t own either and are not sure if the above statement is even true, but you get the point.) We try to assemble a portfolio of high-quality companies that are attractively priced, whose businesses march to different drummers and are not impacted by the same risks. Just as bank robbers rob banks because that is where the money is, value investors gravitate towards sectors where the value is. To keep our excitement (our emotions) in check, and to make sure we are not overexposed to a single industry, we set hard limits of industry exposure. These limits range from 10%–20%. We also set limits of country exposure, ranging from 7%–30% (ex-US).

CONCLUSION

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

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Filed under: "Ask-an-Advisor", Glossary Terms, Investing, Portfolio Management | Tagged: asset allocation, diversification, EQ, Index Funds, IQ, portfolio construction, Portfolio Management, position sizing, risk, Risk Adjusted Rate Return, ROI, Vitaliy Katsenelson CFA | Leave a comment »

PODCAST: How Modernized Self-Directed IRAs Help Democratize [Physician] Retirement

Posted on May 4, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

***

In this podcast, host Dara Albright and guest, Eric Satz, Founder and CEO of Alto IRA, discuss how modern Self-Directed IRAs (SDIRAs) are democratizing retirement planning by providing all Americans with the ability to add non-correlated alternative asset classes to tax-advantaged accounts.

The single greatest – and free – investment tool is also disclosed.

***

What are the Advantages of Rolling the Money of My Retirement Plan into an IRA? - Protection Point Advisors, Inc.

Discussion highlights include:

How SDIRAs offer wealth building opportunities for “not-yet accredited investors”;
How SDIRAs have evolved to accommodate micro-sized alternative investments;
Why alternative assets belong in retirement vehicles;
Three reasons most retirement savers are underweighted in non-correlated assets;
Trading cryptocurrencies without tax consequences;
Why RIAs are looking to ALTO for clients’ crypto allocation;
How to open a cryptoIRA account.

PODCAST: https://dwealthmuse.podbean.com/e/episode-12-how-modernized-selfdirected-iras-help-democratize-retirement-1623424270/

Your comments are appreciated.

THANK YOU

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PORTFOLIO: How to Build One for Today’s Crazy Stock Markets

Posted on February 14, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

Insights For Doctors and All Investors

***

Amazon.com: Vitaliy Katsenelson: Books, Biography, Blog, Audiobooks, Kindle

By Vitaliy Katsenelson CFA

***

NOTE: This piece is a little more technical, and contains a bit more stock-market jargon, than most essays you get from me. While how we build portfolios is important to us and our clients, we realize that the puts and takes might bore many readers.

CITE: https://www.r2library.com/Resource/Title/082610254

***

https://contrarianedge.com/how-to-build-a-portfolio-for-todays-crazy-markets/?utm_source=IMA++-+Main+Articles&utm_campaign=e32bd08a46-UBER_MONEY_MANAGER_KIDNAPPED_COPY_01&utm_medium=email&utm_term=0_f1c90406d1-e32bd08a46-55139025

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Filed under: "Ask-an-Advisor", Experts Invited, Glossary Terms, Investing, Portfolio Management | Tagged: Contrarian Edge, Investing, investing jargon, portfolio, portfolio construction, Portfolio Management, stock market, stock market jargon, Vitaliy N. Katsenelson CFA | 1 Comment »

PODCAST: Why Bitcoin is a “Once-in-a-Species” Asset Class

Posted on August 25, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

In this episode, DWealthMuse host, Dara Albright, and guest Jeff Ross, CIO of Vailshire Capital Management, discuss why bitcoin may just be that once-in-a-species asset class that saves the planet from economic and, yes, even environmental ruin.

This episode is loaded with so many great insights including:

Why Jeff believes bitcoin’s investment risk has evaporated;
How bitcoin fits into Warren Buffet’s investment thesis;
Two characteristics bitcoin skeptics share: a lack of understanding and deep ties to the traditional banking system;
Why bitcoin is a dishonest politician’s worst nightmare;
Why every modern retirement portfolio should have bitcoin exposure;
Why regulatory scrutiny may be turning away from bitcoin and heading straight towards ethereum and altcoins;
How bitcoin could solve the world’s energy problems;
Why we may be nearing the end of the Keynesian economic experiment;
How bitcoin forces an honest unit of accounting by governments;
Why fiat is destined to self-destruct while bitcoin is designed to appreciate in time;
Whether bitcoin can reach a new all-time high by Jeff’s August 29th birthday and cross 100,000 by Dara’s December 24th birthday?

PODCAST: https://dwealthmuse.podbean.com/e/episode25bitcoinbulls/

Your comments are appreciated.

THANK YOU

****

Filed under: Experts Invited, Financial Planning, iMBA, Inc., Information Technology, Investing, Portfolio Management, Videos | Tagged: asset allocation, asset classes, Bitcoin, Dara Albright, jeff ross, Portfolio Management | 2 Comments »

FINANCIAL PLANNING: Strategies for Doctors and Advisors

Posted on August 19, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Filed under: "Ask-an-Advisor", Book Reviews, CMP Program, Financial Planning, Health Economics, Health Insurance, Healthcare Finance, Investing, Portfolio Management, Practice Management, Risk Management, Touring with Marcinko | Tagged: Certified Medical Planner™, David E. Marcinko, Financial Planning, Investing, Portfolio Management | Leave a comment »

FINANCIAL PLANNING AND INVESTING FOR PHYSICIANS: Purchase Textbook Today & Relax Tomorrow

Posted on July 19, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

“MANIC MONDAY” 2021

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YOUR THOUGHTS ARE APPRECIATED

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Filed under: Book Reviews, Breaking News, CMP Program, Financial Planning, Glossary Terms, Investing, Portfolio Management, Touring with Marcinko | Tagged: Certified Medical Planner™, CMP, David Edward Marcinko, Financial Planning, Investing Basics, Portfolio Management | Leave a comment »

Book Dr. David E. Marcinko MBA for your Next Seminar

Posted on December 13, 2018 by Dr. David Edward Marcinko MBA MEd CMP™

Schedule Marcinko for Your Next Seminar!

***

http://www.CertifiedMedicalPlanner.org

***

Book Dr. David Edward Marcinko CMP®, MBA, MBBS for your Next Medical, Pharma or Financial Services Seminar or Personal and Corporate Coaching Sessions

Dr. Dave Marcinko enjoys personal coaching and public speaking and gives as many talks each year as possible, at a variety of medical society and financial services conferences around the country and world.

These have included lectures and visiting professorships at major academic centers, keynote lectures for hospitals, economic seminars and health systems, keynote lectures at city and statewide financial coalitions, and annual keynote lectures for a variety of internal yearly meetings.

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Leadership: Dr. Marcinko Leadership Philosophy
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Front Matter with Foreword by Jason Dyken MD MBA
Foreword Dr. Phillips MD JD MBA LLM
Foreword Dr. Nash MD MBA FACP
Mike Stahl PhD MBA Foreword
Foreword Dr.Mata MD MS
Dr. Getzen Foreword PhD
Dr. Cappiello Foreword PhD MBA
Foreword Dr. Krieger MD MBA

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[PHYSICIAN FOCUSED FINANCIAL PLANNING AND RISK MANAGEMENT COMPANION TEXTBOOK SET]

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[HOSPITAL OPERATIONS, ORGANIZATIONAL BEHAVIOR AND FINANCIAL MANAGEMENT COMPANION TEXTBOOK SET]

[Foreword Dr. Phillips MD JD MBA LLM] *** [Foreword Dr. Nash MD MBA FACP]

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Filed under: Financial Planning, Health Economics, iMBA, Investing, Managed Care, Portfolio Management, Practice Management, Practice Worth, Risk Management, Touring with Marcinko | Tagged: David E. Marcinko, Financial Planning, Investing, medical practice management, Portfolio Management | Leave a comment »

Investment Lessons Learned from the Poker Table

Posted on February 1, 2016 by Dr. David Edward Marcinko MBA MEd CMP™

“I don’t know”

By Vitaliy Katsenelson CFA

These three words don’t inspire a lot of confidence in the messenger and probably will not get me invited onto CNBC, but that is exactly what I think about the topic I am about to discuss. I received a few e-mails from people who had a problem with a phrase in one of my blog posts this fall.

In that article I examined various risks that other investors and I are concerned about. The phrase was “the prospect of higher, maybe even much higher, interest rates.” These readers were convinced that higher interest rates and inflation are not a risk because we are not going to have them for a long, long time, that we are heading into deflation. These readers basically told me that I should worry about the things that will come next, not things that may or may not happen years and years down the road. I am pretty sure that if that phrase had addressed the risk of deflation and lower interest rates ahead, I’d have gotten as many e-mails arguing that I was wrong — that we’ll soon have inflation and skyrocketing interest rates, and deflation is not going to happen. I don’t know whether we are going to have inflation or deflation in the near future.

More important, I’d be very careful about trusting my money to anyone holding very strong convictions on this topic and positioning my portfolio on the basis of them. Any poker player knows that the worst thing that can happen is to have the second-best hand. If you have a weak hand, you are going to play defensively or fold (unless you are bluffing) and likely won’t lose much.

***

But, if you’re pretty confident in your hand, you may bet aggressively (god forbid you go all-in) — after all, you could easily have the winning cards. Four of a kind is a great poker hand unless your opponent has a straight flush. Generally, the more confident you are in an investment, the larger portion of your portfolio will be placed in that position.

Therefore superconvinced inflationists will load up on gold, and superconvinced deflationists will be swimming in long-term bonds. If their predictions are right, they’ll make a boatload of money. If they’re wrong, however, they will have the second-best-hand problem — and lose a lot of money. The complexity of the global economy has been increased by monetary and fiscal government interventions everywhere. There is no historical example to which you can point and say, “That is what happened in the past, and this time looks just like that.” When was the last time every major global economy was this overlevered and overstimulated? I think never. (Okay almost never, but you have to go back to World War II.) What is going to happen when the Fed unwinds its $4 trillion balance sheet? I don’t know.

Also the transmission mechanism of problems in our new global economy is so much more dynamic now than it was even a decade ago. Just think about the importance of China to the global economy today versus 2004. That year U.S. imports from China stood at $196 billion. Just in the first eight months of 2014, they were $293 billion. China was single-handedly responsible for the appreciation of hard commodities (oil, iron ore, steel) over the past decade as it gobbled up the bulk of incremental demand.

Now, I don’t want to sink to the level of the one-armed economist — but conversation about inflation and deflation is just that, an “on one hand . . . but on the other hand” discussion. Just like in poker, second-best hands may be tolerable if, when you went all-in, you did not leverage your house, empty your kid’s college fund or pawn your mother-in-law’s cat. Even if you lost your money, you will live to play another hand — maybe just not today.

***

In the “I don’t know” world, second-best hands when you bet on inflation or deflation are acceptable on an individual position level (you can survive them) but are extremely dangerous, maybe fatal, on an overall portfolio level.

Investing in the current environment requires a lot of humility and an acceptance of the fact that we know very little of what the future holds. I’d want the person who manages my money to have some discomfort with his or her economic crystal ball and to construct my portfolio for the “I don’t know” world.

Assessment

As a writer, you know you are in trouble when you have to quote both Albert Einstein and Mahatma Gandhi in the same paragraph, but when I ask readers to do something as difficult as I am in this column, I need all the help I can get. “It is unwise to be too sure of one’s own wisdom,” Gandhi said. “It is healthy to be reminded that the strongest might weaken and the wisest might err.” Einstein took the idea a step further: “A true genius admits that he/she knows nothing.” Smarter and humbler people than me were willing to say, “I don’t know,” and it is okay for us mortals to say it too.

Repeat after me . . .

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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

***

Filed under: Investing, Portfolio Management | Tagged: Investing, Portfolio Management, Vitaliy Katsenelson CFA | Leave a comment »

ME-P Health Economics, Financial Planning & Investing, Medical Practice, Risk Management and Insurance Textbooksfor Doctors and Advisors

Posted on November 12, 2015 by Dr. David Edward Marcinko MBA MEd CMP™

ME-P At Your Service!

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[PHYSICIAN FOCUSED FINANCIAL PLANNING AND RISK MANAGEMENT COMPANION TEXTBOOK SET]

[HOSPITAL OPERATIONS, ORGANIZATIONAL BEHAVIOR AND FINANCIAL MANAGEMENT COMPANION TEXTBOOK SET]

[Foreword Dr. Phillips MD JD MBA LLM] *** [Foreword Dr. Nash MD MBA FACP]

[HEALTH INSURANCE, MANAGED CARE, ECONOMICS, FINANCE AND HEALTH INFORMATION TECHNOLOGY COMPANION DICTIONARY SET]

[Mike Stahl PhD MBA] *** [Foreword Dr.Mata MD CIS] *** [Dr. Getzen PhD]

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http://www.BusinessofMedicalPractice.com

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Dr. David Edward Marcinko, editor-in-chief, is a next-generation apostle of Nobel Laureate Kenneth Joseph Arrow, PhD, as a health-care economist, insurance advisor, financial advisor, risk manager, and board-certified surgeon from Temple University in Philadelphia. In the past, he edited eight practice-management books, three medical textbooks and manuals in four languages, five financial planning yearbooks, dozens of interactive CD-ROMs, and three comprehensive health-care administration dictionaries. Internationally recognized for his clinical work, he is a distinguished visiting professor of surgery and a recipient of an honorary Bachelor of Medicine–Bachelor of Surgery (MBBS) degree from Marien Hospital in Aachen, Germany. He provides litigation support and expert witness testimony in state and federal court, with medical publications archived in the Library of Congress and the Library of Medicine at the National Institutes of Health.

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Filed under: Book Reviews, Financial Planning, Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, iMBA, Information Technology, Insurance Matters, Investing, Portfolio Management, Practice Management, Retirement and Benefits, Taxation | Tagged: david marcinko, Financial Planning, Health Economics, Health Insurance, physician investing, Portfolio Management | 1 Comment »

The third quarter for 2015 was a REAL humdinger!

Posted on October 8, 2015 by Dr. David Edward Marcinko MBA MEd CMP™

The Markets – Update

By Arthur Chalekian GEPC

[Financial Consultant]

Well, the third quarter for 2015 was a REAL humdinger!

***

It began with the first International Monetary Fund (IMF) default by a developed country (Greece) and finished with Hurricane Joaquin possibly headed toward the east coast. In between, China’s stock market tumbled, the Federal Reserve tried to interpret conflicting signals, and trade growth slowed globally. After such a stressful quarter, we may see an uptick in the quantity of alcoholic beverages consumed per person around the world. That number had declined (along with economic growth in China) between 2012 and 2014, according to The Economist.

***

No Grexit – for now

Despite defaulting on its IMF loan, rejecting a multi-billion-euro bailout plan, and closing its banks for more than two weeks, Greece was not forced out of the Eurozone. Instead, Europe cooked up a deal that left the IMF unhappy and analysts shaking their heads. The Economist reported the new deal for Greece was an exercise in wishful thinking. The problem is the deal relies on “the same old recipe of austerity and implausible assumptions. The IMF is supposed to be financing part of the bailout. Even it thinks the deal makes no sense.” It’s a recipe we’re familiar with in the United States: When in doubt, defer the problem to the future.

***

A downturn in China

Despite reports from the Chinese government that it hit its economic growth target (7 percent) on the nose during the first two quarters of the year, The Economist was skeptical about the veracity of those claims. During the first quarter.

***

“Growth in industrial production was the weakest since the depths of the financial crisis; the property market, a pillar of the economy, crumbled. China reported real growth (i.e., after accounting for inflation) of 7 percent year-on-year in the first quarter, but nominal growth of just 5.8 percent.”

***

That statistical sleight of hand implies China experienced deflation early in the year. It did not.

On a related note, from mid-June through the end of the third quarter, the Shenzhen Stock Exchange Composite Index fell from 3,140 to about 1,716, according to BloombergBusiness. That’s about a 45 percent decline in value.

***

Red light, green light at the Federal Reserve

Green light: employment numbers. Red light: consumer prices, inflation expectations, wages, and global growth. Late in the quarter, the Federal Reserve decided not to begin tightening monetary policy.

According to Reuters, voting members of the Federal Open Market Committee (FOMC) decided uncertainty in global markets had the potential to negatively affect domestic economic strength. They may have been right. The Wall Street Journal reported, although unemployment remained at 5.1 percent, just 142,000 jobs were added in September. That was significantly below economists’ expectations that 200,000 jobs would be created. The Journal suggested the labor market has downshifted after 18 months of solid jobs creation.

***

Global trade in the doldrums

The global economy isn’t as robust as many expected it to be. According to the Business Standard, the World Trade Organization (WTO) lowered its forecast for global trade growth during 2015 from 3.3 percent to 2.8 percent. Falling demand for imports in developing nations and low commodity prices are translating into less global trade. Expectations are trade growth will be 3.9 percent in 2016, which could help support global economic growth.

***

Coming Change

America’s share of the global economy is potent. Our country accounts for 16 percent (after being adjusted for currency differences) of the world’s gross domestic product (GDP) and 12 percent of merchandise trade.

Again, according to The Economist, we dominate “the brainiest and most complex parts of the global economy.” Our presence is strong in social media, cloud computing, venture capital, and finance. In addition, the dollar is the world’s dominant currency. While the view from the top is pleasing, we may not be there forever. The Economist explained:

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“In the first change in the world economic order since 1920-45, when America overtook Britain, [America’s] dominance is now being eroded. As a share of world GDP, America and China (including Hong Kong) are neck and neck at 16 percent and 17 percent respectively, measured at purchasing-power parity. At market exchange rates, a fair gap remains with America at 23 percent and China at 14 percent … But any reordering of the world economy’s architecture will not be as fast or decisive as it was last time…the Middle Kingdom is a middle-income country with immature financial markets and without the rule of law. The absence of democracy, too, may be a serious drawback.”

***

It may be hard to believe, in light of recent economic and market events in China, but change is on its way. Regardless, the influence of the United States should continue to be powerful well into the future.

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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

***

Front Matter with Foreword by Jason Dyken MD MBA

“BY DOCTORS – FOR DOCTORS – PEER REVIEWED – FIDUCIARY FOCUSED”

***

Filed under: Investing, Portfolio Management | Tagged: Arthur Chalekian, Business Standard, FOMC, Investing, Portfolio Management, Shenzhen Stock Exchange Composite Index | 3 Comments »

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