Weekly Update

There are some things I’ll never understand. Here’s one:

Why would my lovely wife, Marea, purchase two new pairs of sneakers and throw my old ones out without asking me first?

“You need to replace sneakers regularly and alternate them between your daily power walks,” she informed me.

I do? Who knew?

I walk for 3.5 to 4 miles for almost an hour practically every day. Apparently, according to my wife, this qualifies me as a highly tuned athlete who needs cutting edge footwear to maintain peak performance for my upcoming heat in the Senior Slow-Walk Olympics.

I wonder if Bill Russell and Bob Cousy alternated specifically designed point guard and center sneakers between games.

“Oh, and they should be replaced every 300 miles,” she added.

So I have to throw my sneakers away after every 75 walks? How do I keep count? Maybe sneaker companies can embed a hidden odometer in the soles of sneakers. Or, the foot engineers could inject a color fading dye in heels indicating when a new pair is needed. I believe toothbrush manufactures have the color of bristles fade away when it is time to buy a new brush. Why not sneakers?

Reflecting upon last week’s Update, I may have been wrong when I stated that women and women alone drive the global economy. The power of advertising is truly incredible! Not only is it innovative enough to sell designer sneakers for different purposes, it supports an infinitely sustainable business model by making consumers believe that they need multiple pairs of footwear for the same activity.

We consumers love advertising terms such as introducing, new, improved, best, original, customized, exclusive, doctor recommended, proven, free and finally, as Pandora states in its tag line, unforgettable.

And there is no reason for the creative marketing minds to stop there. I was looking through the December issue of SHAPE magazine and learned that New Balance markets training footwear just for the winter; skechers makes GOwalk footwear available so women can “GO like never before;” and best of all, Amy Schlinger, a writer for SHAPE highlighted the need for “Socks That Rock.” That’s right, activity specific socks for hiking, running, crossfit (whatever that means), yoga, and skiing.

How about this one? Gap markets pants that have a “perfect performance fit!” I should get a pair of performance fit pantaloons to wear under my suit at business meetings and, of course, while making my investment decisions. That should exponentially increase the annual performance of Marea’s portfolio.

Switching gears as we enter the New Year, I reviewed investment guidelines first published last year and concluded that it made sense to once again share them with Update readers.

Investment Guidelines:
• Stay diversified and don’t place all of your assets in one stock, bond, or fund.
• Invest globally with a concentration in the USA. (The portfolios publish in the Update do have global exposure through an international fund and large U.S. firms that sell products and services throughout the world.)
• When buying individual securities, concentrate on industry leaders offering dividends, which ultimately provide a cushion during corrections and remember, dividends generate approximately 40% of market performance.
• When increasing equity exposure, execute trades on down market days.
• Hold a cash position between 5% and 20% of a portfolio’s value.
• Fixed-income concentration should be in short to intermediate bond funds.
• Populate portfolio with both equity and bond funds charging low expenses and a better than average three and/or five-year track records.
• Know a security’s investment philosophy, objective, and style prior to purchase.
• A position/portfolio must meet personal suitability standards based on objectives, volatility, and investment time horizon.
• In a taxable account, be aware of the potential tax exposure.
• When considering bond funds, a low expense ratio is extremely important to overall annual performance.
• Index product performance should basically track its long-term category average.
• Monitor investments weekly. (For example, Yahoo finance allows you to compare the performance of your funds to its peer group over multiple periods of time.)
• Analyze a product’s performance over time (year-to-date, one year, three years, five years).
• Monitor sector investments closely.
• Performance must be assessed on a risk/return basis. (For example, Investor “A” generates a 5% return; Investor “B” generates a 10% return; which portfolio was the better performer? It completely depends on the level of risk inherent in each portfolio.)
• Note that raw performance benchmarks including the Dow, S&P 500, NASDAQ, and the Russell 2000 do not incorporate trading costs, fund expenses, and advisory fees.
• Let’s assume equity markets are up 10% and fixed income and cash are both flat at 0%. You have 50% invested in equity, 50% in fixed income and cash, and total expenses of 0.5%; a reasonable return for your portfolio would be approximately 4.5%.
• Be aware that markets tend to overreact to news, good or bad.
• Realize that absolutely no one knows how markets will perform next week, next month, or next year.
• So, my guess is that the market will generate an 8% return in 2013. (By the way, 10% is about the average stock market annual rate of return.)
• Be aware of a portfolio’s potential worst 1, 3, 5, and 10 year case scenario based on historical data.
• Unless you are willing to do your homework weekly, consider hiring a financial advisor.
• Dialing your equity allocation up (increased volatility) or down (less volatility) will ultimately increase the probability of capturing more or less of both the upside and downside of market performance.
• Wear performance fit pants when analyzing your investments.

• Do not
o Purchase any investment product you do not understand.
o Sell a fund because of poor performance over a limited period of time. (If a fund under performs for a couple of months, place the fund on a watch list for at least 30 days prior to making a decision to hold or sell out of the position.)
o Buy bond funds with higher than average expense ratios.
o Select a stock simply because of a potential high-dividend payout. (Make sure the company has the cash flow necessary to pay the dividend.)
o Allocate more than 5% to 7% per individual sector.
o Try to time the market.
o Overreact to the news of the day.
o Chase performance. (Performance is relative based on asset allocation, risk inherent in the portfolio, and expenses including trading costs, a fund’s expense ratio and advisory fees.)

Have a productive Week.
The Update is written by Chris Leone and Ron Mastrogiovanni

Growing Fiscal Cliff Worries Zero in on Medicare

In Washington D.C. growing worries about the fiscal cliff has led to debates on raising Medicare’s eligibility age to reduce the government’s huge deficits.

For years numerous ideas about controlling the exploding cost of entitlement programs, such as Medicare, have passed between party members but growing concerns about Fiscal Cliff have brought them in to perspective. Medicare, a $590 billion annual program is one of the most expensive and popular federal programs, that has long been untouchable and rarely trimmed. A change in age eligibility would not alter traditional benefits, but would not be available to all senior citizens 65 and older. Medicare’s popularity makes proposed changes a much harder sell amongst voters.

The most frequently discussed proposals that would affect Medicare’s 52 million beneficiaries are more means-testing, meaning higher costs for wealthier retirees, and raising the Medicare eligibility age by two years to 67 years old.

Regardless, of increasing age eligibility both the White House’s deficit reduction proposal and the Republican counter offer, submitted on Monday, propose trimming Medicare.

Republicans and Democrats disagree on what, where, and how to cut the program. Many Republicans, notably, House Speaker John Boehner, R-Ohio, openly support hiking the eligibility age to 67. It is estimated that increasing the age would reduce Medicare’s spending up to 5 percent annually, which would save hundreds of billions of dollars over time. These proposed cuts, in addition to others to additional healthcare programs including the Medicaid, could result in $400 billion to $600 billion in savings over a decade as part of a deficit-cutting agreement Congress and the White House must reach to avoid the so-called fiscal cliff.

Not everyone supports the proposed changes, people like Senator Dick Durbin, D-Ill., says that increasing the age would create numerous oversights and could make the program too expensive for some seniors.

A recent study by the AARP identified more negative windfalls if Medicare’s age eligibility is upped to age 67. There is a possibility that this could lead to higher monthly premiums for those on Medicare. Not allowing younger and healthier 65 and 66-year olds would raise the others’ costs, but the increase would only be around 3 percent. This would also lead to more expensive premiums for private coverage as well. This is because older adults would have to remain using private insurance for an additional two years before using Medicare. This older age group, compared to younger adults, is also more costly to insure. In total, this would lead to higher healthcare costs for two out of three adults whose entry into the Medicare program would be delayed. Medicare age eligibility wouldn’t just affect people, but also businesses. This would lead to an increase in employer costs as senior workers would stay on company insurance plans.

The Congressional Budget Office estimates that raising the eligibility age could save $148 billion in Medicare spending over the next decade, but there are drawbacks. It has also been estimated that the number of uninsured citizens would also increase. Highly populated states like Texas that won’t accept Obama’s Medicaid expansion in his health overhaul would create millions of uninsured citizens. Critics claim that these cutbacks would hurt business by placing the burden of these costs onto employers. This would lead to an increase in employer costs as senior workers would stay on company insurance plans.

The threat of this country toppling over the fiscal cliff has enabled Republican’s campaign to cut Medicare to perhaps have its first success. But, it remains to be seen if these changes will take affect and if the positive outcomes will outweigh the negative ones.

-Suzanne Bernard

Obama and Federal Government Combat Coming Doctor Shortage

By 2025 the United States is going to have a doctor shortage, specifically primary care physicians, a development that could have serious consequences for the growing number of retiring baby boomers

The projected doctor deficit will continue to grow as roughly 79 million baby boomers request more medical care, except if the U.S. begins turning out more doctors. A number of recent studies claim this shortage could make it more difficult to get expedient and quality healthcare.

One of these studies was conducted by the Association of American Medical Colleges, which estimated that by 2015 the U.S. will have 62,900 fewer doctors than needed. In a decade this number will double, as the expansion of insurance coverage and the aging of retirees increases the demand for healthcare. Even excluding the Affordable Healthcare Act, the scarcity of physicians in 2025 would still exceed citizens’ requirements for doctors who are active in patient care. This report expects a shortfall of over 130,600 patient-care doctors, of 50 percent are primary-care physicians.

The doctor shortage is not a new development and has been the subject of heated debate inside Congressional meetings, especially when attempting to discount Obamacare. Opponents of the new health care law believe that this new study demonstrates that the well insured, shouldn’t have to share an increasing scarcity of doctors with the millions of uninsured.

Those who are against the Affordable Healthcare Act point to the fact that Health experts admit that there is little that the government or the medical profession will be able to do to combat the shortage by 2014. It seems that this issue will compound itself when one considers that it takes a decade to educate a physician. The drought of doctors entering into the field is even more startling when one examines that suggested government incentives and provisions will increase the number of primary care doctors by only 3,000 in the next decade, unless serious changes are made. But, that estimate will still fall drastically short of the 45,000 doctors needed in communities around the U.S.

The Obama administration has taken note of and is concerned over the future lack of physicians. They have started to delve into ways of expanding the doctor pool to meet the needs of the expanding senior and uninsured population. To lessen the far reaching impact of this shortage Obama and his cabinet are exploring several alternatives. One of the first provisions will occur 2013 and 2014 when the health care law increases Medicaid’s primary care payment in order to counteract the argument that primary care physicians are underpaid. To combat this the the Medicare Payment Advisory Commission, an independent federal panel, has suggested increasing the payment for primary care services to 10 percent in the payment for many primary care services, including office visits. Another inducement will give money to educate primary care doctors entering the field and provide incentive like rewards when they work underserved communities and build-up community health resources.  

States are also attempting to confront the doctor deficit by considering several key proposals that would lessen the blow in the coming years. Several of these proposals focus on education and the way that patients receive care. They have explored incentive based programs that are designed to up the enrollment in medical schools and residency training programs. Instead of relying on just doctors many believe relying on nurse practitioners and physician assistants could fill the gap. Lastly, they are looking to enlarge the National Health Service Corp to send doctors and nurses into underserved rural areas and poor neighborhoods.

It appears that the coming doctor shortage is inevitable. But, the provided incentives from Obama’s administration and federal proposals seek to overturn the coming tide. Primary care physicians are and will be in shorter supply until medical schools start churning out more physicians who are willing to forego into specialty fields.

-Suzanne Bernard

Tracking Longevity

Life & Health Advisor magazine interviews Ron Mastrogiovanni, founder of HealthView Services about the new role health care
will play in retirement and how it must be balanced with the emerging new realities of the retirement income picture.

Read Full Article »

Restless in Retirement

It might sound oxymoronic to think about “working in retirement” yet more than 75% of us expect to work in retirement per a recent study by Merrill Lynch and nationally recognized gerontologist, author, and President of Age Way, Ken Dychtwald.  Working in retirement can put a little extra folding money in your pocket.  It can keep you engaged.  It can provide that basic sense of purpose that is so uniquely American… to be able to answer that cocktail party question, “So, what do you do?”  (Especially for us “Type A” types that never quite got their foot off the throttle!).   Perhaps, for many of us, it is work we always wanted to do for the first time in our lives.  Yet, for others, it isn’t just a lifestyle choice but rather a deep desire to defray living costs-especially health care-and not tap into that nest egg.  With that said, how we work in retirement is taking whole new shapes.  The authors suggest that many of those working in retirement “cycle” through periods of work and a smaller number working on a part-time basis.  This flexibility can allow retirees greater time for leisure activity and also provides the need for people to manage healthcare issues that they or their spouses may face. 

Considering these observations, we recommend a few things to keep in mind as you plan ahead:


  • Continuing to work could help delay taking your Social Security benefits which may result in higher benefits later on.
  • This income could help you avoid drawing down your investments.  While you may not have a great deal new savings, you will be covering day-to-day costs.
  • Employers may offer healthcare.  If either you or your spouse is under 65 for a child under 26 years old could be of significant benefit.

Watch Items:

  • If you are collecting Social Security, working may impact your benefits.
  • The additional income could impact your tax bracket.  Traditional financial and tax planning might not always take this into account.
  • Start planning specifically for health care costs along with general expenses in retirement.

The contents of this site, such as text, graphics, images, and any other material contained on site are for informational purposes only.  Always seek professional advice for your personal situation.


Study Shows Folic Acid Does Not Prevent Heart Disease

It is a widely accepted belief that folic acid reduces a person’s risk for cardiovascular disease. This notion is so prevalent that according to the Center of Disease control and Prevention, one-third of Americans currently takes a multi-vitamin that contains folic acid. However, a recent study published in the Archives of Internal Medicine conclusively proves that folic acid does not prevent heart disease.

Folic acid is an artificial version of folate, which is a type of B-vitamin that has been shown to correlate with blood levels of the amino acid homocysteine, a protein that has been linked to heart disease. Doctors hypothesized that taking folic acid could ward off cardiovascular problems by lowering the amount of homocysteine in the blood. However, these conjectures had not definitively been proven.

A group of scientists from North American and the United Kingdom undertook a large-scale study that covered eight different trials consisting of 37,500 people who had, or were at risk for, cardiovascular illness. The researches gave half of the participants between .8 to 40 milligrams of folic and the other half a placebo over five years.

At the conclusion of the study, the scientists found that there was a negligible difference between the two groups' heart health. The group that was given the supplement had a 25% reduction in their homocysteine level, yet had no significant decrease in the occurrence of heart disease. The supplement group had an 11.4% rate of having a heart attack, whereas the placebo group had an 11.1% rate of occurrence. The risk of stroke hovered just above 4% for both groups. The researchers concluded that folic acid has no measurable effect on heart health.

The study’s organizers believe these results have debunked the myth of folic acid and discredited homocysteine as an accurate gage of future heart health. According to head researcher Dr. Robert Clarke, “The results are definitive and it is unlikely that any further trials will be set up to address this question.”

However, this doesn’t mean you should avoid it. Folic acid is found in green vegetables and grain products that are good for your heart and are an important part of maintaining a healthy diet. Moreover, it is beneficial for people with specific condition, especially women who are expecting, as it is vital for cell growth.

Folic acid isn’t a magic supplement that prevents heart disease. The most reliable and proven way to avoid heart attacks and stroke is to be committed to a healthy lifestyle and regularly see a physician.  


Without a Choice

A report in the Boston Herald yesterday cited that
Medicare Advantage Plans will soon be extinct in Massachusetts, and over
200,000 elderly subscribers will have to re-evaluate their Medicare options.

Medicare Advantage, formerly know as Medicare Plus
Choice (and also Medicare part C) is a private insurance plan, designed like
traditional Health Maintenance Organizations (HMO) that provides almost the
same coverage as Medicare Parts A and B at a lower cost. Subscribers enjoy some flexibility
in these programs, as opposed to the clearly defined parameters of Parts A and
B, but while the initial savings may be attractive, some referrals and
“in-network” restrictions can apply.
There are also some considerable disadvantages and complexities to the
program. Subscribers are
responsible for 100% of cost for out-of-network doctor visits, and some
specialists may not be covered.

Despite some unpredictability, over 11 million
Americans are currently enrolled in Medicare Advantage Plans and seem satisfied
with their performance. However,
with the inevitable shifting of current government healthcare distribution to
make way for the new legislation, it is likely that this option will soon be
reduced to levels of inefficacy or eliminated altogether.

New Alzheimer’s Study Sheds Light

A recent report found that spinal taps can precisely
diagnose Alzheimer’s in people who are experiencing considerable memory loss. In
addition, the researchers believe that spinal tap testing may also be able to
predict whether a person with no symptoms will eventually develop the disease.
These findings mark an important step in our understanding of this devastating
cognitive disorder and provide clues into possible treatments and management

The study was published in the Archives of Neurology and is ground breaking in that it presents
proof that spinal taps are one hundred percent accurate in determining whether
a person will have Alzheimer’s. The study examined more than 300 hundred
patients in their seventies. Among this group were people who had normal memory
retention, were experiencing difficulties with memory loss, and those who had
ongoing Alzheimer’s. These various patients had their spinal fluid analyzed for
amyloid beta and tau, proteins that are known to accumulate in the dead and
dying nerve cells in the brain.

Researchers found that almost all the patients with
Alzheimer’s had the anticipated protein levels. Among those with memory loss,
nearly 75% had the characteristic protein pattern and every one of these
patients went on to develop the disease within the next five years.  Approximately one-third of the patients
with no symptoms also had the indicative spinal fluid makeup, and the
scientists believe these people will eventually have Alzheimer’s.

The treatment of Alzheimer’s has been unguided and
ineffective due to a crippling lack of information about the disease. Recently,
however, there have been a slew of studies that have provided much needed
insight into the disorder, including this most recent report. The more
information we have, the more likely a care options or maybe even medicinal
strategies can be developed. A disease that has been untreatable could become

To this end, the spinal tap study is important because it
confirms that protein buildup in the brain is likely the source of the disease.
Therefore, medications that prevent this scenario could treat the disorder.
However, not enough is known about the role of these proteins in normal brain
performance to confirm this plan of action. More testing needs to be done in
order to better understand this correlation between protein levels and memory

It is unclear how these findings will be incorporated into
the medical field. It is believed that Alzheimer’s starts to develop
approximately ten years before it culminates in a diagnosis. The spinal tap
test would allow doctors to diagnosis patients in the early stages and test
various treatments. However, there are ethical questions involved. What is the
merit of diagnosing patients with a degenerative disease that is currently
untreatable? When should doctors test for the disease? Also, the accuracy of
spinal taps varies according to the doctor and the lab; how will these
differences be taken into account?

Though more testing needs to be done in order to determine how
spinal taps should utilized, it is clear that this breakthrough has provided
much needed insight into this devastating disease. 

First Yoga, Now Yogurt

As a child, I remember my father getting up in the middle of
the night and stumbling over to the medicine chest for a large blue bottle of
white pellets. He would toss a
handful in a glass of water and hand me one to taste. The Brioschi would fizz and tingle in my mouth, and I would
often be left wondering what would possess someone to drink an entire glass of
the volcanic concoction.

Some readers may identify with my father’s symptoms: an
indescribable feeling of panic caused by an inability to swallow; a burning
sensation in chest; a chronically sore throat. These are very often the warning signs of gastroesophageal
reflux disease (GERD) or
acid reflux, as it is commonly referred—a
condition that affects an estimated 60 millions Americans. Some may experience an occasional acute
episode, while others can become debilitated by the condition. There is no shortage of “cures” on the
market—from over-the-counter remedies like Tums and Pepcid to doctor-prescribed
Protonics. There are also plenty
of “secret solutions” that can be purchased online for $29.95 or so (I’ll save
you the trouble: apple cider vinegar).

While the occasional bout of heartburn may seem benign on
the surface, it is the body’s way of communicating that there is something
wrong in the digestive process; the cause is often behavioral, as poor eating
and drinking habits usually initiate or exacerbate the condition. There are literally hundreds of
websites that describe GERD and offer treatment advice, so we will spare you
from retelling what a simple Google search can yield. I will however, share with you my personal tale of how to
cope with the disease without using medication or making major dietary changes.

When I was first diagnosed after a series of tests, including
an upper GI exam, my doctor prescribed Omeprazole. Stand in any grocery line and odds are that someone waiting
to check out either uses, has used, or knows someone who is using
Omeprazole. The idea of being
unnecessarily tethered to a medication that could be eliminated with behavioral
modifications didn’t sit well with me, so I tried a host of touted cures (and
yes, bought the vinegar brochure), changed my eating patterns, and even gave
up—dare I say it—coffee. None of
them worked…

..until I met Chobani.

For those of you who are not familiar with Chobani, it is a
Greek yogurt that contains a dose of probiotics—“good” bacteria that aid in
digestion and maintaining a healthy immune system. After two years of my daily six-ounce cup, I am reflux free
and have been sick only once. Of
course, that bout occurred during a forced three-day sabbatical when my wife
forgot to buy it and I couldn’t get to the store. (We have since reconciled). It is high in protein, low in
carbohydrates, relatively inexpensive, and best of all, tastes much better than
most of the runny blobs in your local dairy aisle.

While GERD is certainly a serious condition and varies in
severity from person to person, those with a mild case may find respite in this
little miracle mousse.Combine it daily with sensible eating habits, a relatively
low-fat, high fiber diet, and exercise, and you might be able to throw away the
medications—and Brioschi—for good.

Open-Scheduling On The Rise Among Primary Care Physicians

Among the myriad of problems
plaguing our healthcare system, none may be quite as pressing as inadequate
access to a primary care physician. You would be hard-pressed to find someone
who has not had to schedule an appointment weeks in advance and endured half an
hour or longer waits in a doctor’s office for what turns out to be a visit that
lasts mere minutes. According to a 2009 study conducted by Merritt Hawkins
& Associate, Americans typically have to book an appointment twenty days in
advance and will have a twenty-minute waiting period once they arrive before
they may see their physician.

In turn, physicians have had to
deal with an increasing patient load that requires more time that they simply
do not have. Currently, overburdened doctors typically spend approximately ten
minutes with a patient, which is often insufficient. This situation will only
be exacerbated by the addition of thirty-million enrollees in our national
healthcare system and the anticipated shortage of primary care physicians. It
seems that the logical consequence will be even longer waiting periods and less
face time with your doctor.

Medical professionals have long
been aware of this issue and have developed new systems to more efficiently
disseminate doctors’ time and services. One method that has steadily gained in
popularity and prevalence is known as open-scheduling. Rather than booking
patients in advance, a doctor will set aside a substantial portion of their day
for appointments scheduled on a daily first-call, first-served basis. The remaining time will be split
between long standing appointments and emergencies. The physician determines
the length of the time slots and how much of his schedule he will keep open.

Advocates of the open-access system
argue that it diminishes the number of double bookings, missed appointments,
and patients who call in with emergency visit requests, which in turn helps a
physician’s practice run more smoothly and efficiently. Doctors are able to
avoid overbooking their day and can better focus on their daily round of patients.
Studies have also shown that patients have a better experience and improved
access to their physician. TransforMED conducted an analysis of better care
strategies at thirty-six family practices across the nation and found that
open-access earned the highest patient ratings. However, others dismiss the system as being unfeasible in
the long term. A University of Pittsburgh found that after the first initial months
patients who needed follow up appointments had to endure lengthy waiting
periods and expressed overall dissatisfaction. It is important to note that this study only covered six primary
care practices, all located in the Boston area; however, the report raised valid concerns over the
sustainability of the system.

Regardless of public opinion,
open-access seems to be a growing trend and has won the support of influential
players in the medical and political arena. For example, the Institute of
Healthcare Improvement, the non-profit think tank that was headed by Dr. Donald
Berwick (until his recent appoint to administrator of Medicare and Medicaid
programs), has publicly endorsed the system. Time will tell whether open-access
becomes the norm, but is almost certain that it will become more pervasive in
the coming years.