Healthcare Op-Ed in The State

The State paper (Columbia,SC) carried an opinion piece that I wrote (although they edited a good bit) on the possible unintended consequences of turning physicians into technicians following strict government mandated guidelines. It was timely because of the so called health care summit in Washington and the 21% Medicare fee cuts set to go into effect Monday for physicians. We converted the link here

All that Jazz

I came across an article headline yesterday by seasoned financial writer Jim Jubak "Ride this bull,but be ready to jump". The sub-heading was " the stocks you choose and when you buy can make a huge difference". Wow! Really? That is it? Hard to believe that even in the face of several decades of good evidence refuting the timing and stock selection thesis, it is still alive and well in the popular media. Why? Because they have space/time to fill .

Job One in maintaining discipline (the first "D" in the DADS -Discipline/Awareness of Costs/Diversification/Structure philosophy) is to block out the day to day noise. That is much harder today because of the myriad of media outlets pushing drivel out endlessly. Financial science provides powerful guidelines on how to have a successful investment experience. That said, returns are more dependent on investor behavior than stock or fund performance. Long term, disciplined investors have historically done much better than the market timers.

Birthplaces and Birthdays

The birthplace of Western Civilization, Greece, has been in the news lately over their huge debt problems . Today is also Presidents' Day- the ceremonial birthdays of Washington and Lincoln. By the standards of a country like Greece, we are still a young county perhaps just beginning to mature and facing the problems that go along with this process. The whole world is awash in debt and the strictures of heavy taxation have taken their toll in many of these countries such as Greece (along with Portugal, Spain, Ireland, Italy, England and others). Everyone on this side of the pond realizes the federal government here is rapidly approaching a debt crisis as well. My concern at present , however, is on many of the states where huge debt burdens are looming without any of the solutions available to the central government. For instance, California (which has an economy larger than Greece) is running a 22% budget deficit . A number of other states- Arizona, Florida, New Jersey and Illinois to name a few are facing similar issues. As property valuations decline and property tax revenues fall these budgets will be under yet additional stress.

All of this is a backdrop to what is broadly known as "crowding out" in the financial markets and generally creates lower growth for the economy and ultimately lower investment returns as well. Stay tuned.

Clean& Simple vs. Latest& Greatest

NY Times had a good piece this weekend on Professor Burton Malkiel's newest book " The Elements of Investing". The article says Malkiel advocates index funds as the "cleanest,simplest way to invest" and we would agree. He also makes the point that wealthy investors are often hurt by chasing the latest,greatest investment . God knows that is true.

That article quotes some detractors as well . There are many of course as only about 15% of stock investments are through index funds. That means 85% are still trying to out-select and out-time the market despite decades of contrary evidence.

Uncertainty and Outcomes

The underpinnings of our investment philosophy contain the premise that managing wealth need not rely on seers and soothsayers. We don't know what will happen today or tomorrow but have confidence about the longer term. We know that most investors need to remain invested in "risky" (the reason for the quotation marks is the real risk may actually reside in being outside the market ) assets all the time to accomplish their longer term goals. Regardless of what happens in the markets today or this week or this month, the conscious act of staying invested will likely prove to be more important than investment returns. Control the controllable and let the rest ride.