Bob Carlson

September 15, 2014

Why Medical Care Differs

Filed under: Health,Medicare,Medicare Advantage — Bob @ 5:20 pm

Several studies have found that medical treatments vary considerably around the country. Studies of Medicare have been especially revealing, finding that some treatments and procedures occur far more frequently in some parts of the country, even down to the county level, than in other areas. This link exposes two views of the causes. One story linked at the beginning of the story makes the case that patients demand the differences. The opposite case is made by the story I’ve linked to, summarizing research that doctors are the cause of the differences.

There is no debate that large regional differences in health care provision, costs, and outcomes exist. For example, as Atul Gawande famously documented, in 2006 Medicare spent $15,000 per beneficiary in McAllen County, Texas and half that in the very similar county of El Paso, Texas. But there is considerable debate as to what drives such differences…

Support for Open Borders

Filed under: Economy — Bob @ 12:20 pm

Immigration isn’t the main top for most Americans, but a number of people with different views are very passionate about it. Here’s a dispassionate discussion, relying on economic theories and research to make a few points in favor of more immigration. It has several links to other more detailed pieces and in general is a good package of the evidence and arguments of this view.

When most people are on earth are dealt such a bad hand, to try to stop them from bettering their condition seems a very cruel thing to do to someone.

My elevator pitch has no economics in it, because the economics is actually too subtle to really explain in an elevator pitch. If I had a little bit more time, I would say, “What do you think the effects for men have been of more women in the workforce?”

Are there some men who are worse off? Sure. But would we really be a richer society if we kept half the population stuck at home? Isn’t it better to take people who have useful skills and let them do something with it, than to just keep them locked up someplace where their skills go to waste?

Lessons in Success

Filed under: Retirement - General — Bob @ 10:39 am

It’s a story from Golf World, but it applies to all fields. It’s a story about “grit.” The thesis is that success in any field depends not on knowledge, talent, skill, or even hard work. Those things are important. But the difference between the very successful people and everyone else are the qualities described as grit. It’s not an anecdotal or motivational piece. It’s based on studies and research and seems to be well-founded. It’s a good lesson for everyone but is something important to pass on to children and grandchildren, and especially to their parents.

In an April 2013 TED Talk (Technology, Entertainment and Design) viewed to date 4.8 million times, a psychology professor at the University of Pennsylvania named Angela Duckworth discussed the foremost predictor of success among Chicago public schoolchildren she’d studied, some in dreadful financial and social situations. “It wasn’t talent or brains,” she said. “It wasn’t social intelligence. It wasn’t good looks. It wasn’t physical health. It wasn’t IQ. It was grit.” Duckworth defined grit as “a passion and perseverance for very long-term goals.” She explained: “Grit is having stamina. It’s living life as a marathon, not a sprint.” It includes the kind of commitment Bill Shean showed, seasoned with other traits, like deep-seated optimism, a willingness to delay gratification and, most important, an attitude that sees obstacles as part of learning. Duckworth found the same in teachers and salespeople. I asked her if she thought amateur golfers could develop grit. “If there’s motivation, it’s never too late,” she said. Unlike intelligence, grit is a trait you can acquire. You can learn it.

September 12, 2014

RIP: Paul Macrae Montgomery

Filed under: Asset Allocation,Investing — Bob @ 8:20 am

You might know him better as creator of the magazine cover indicator and the hemline indicator of stock market investing. I had the opportunity to hear him speak once and was impressed with his approach to investing and recommendations. He was much more serious than the gimmicks of those two indicators indicate. You can read a remembrance here.

He was a nationally-renowned forecaster of stock and bond markets who chose to stay put in his home town of Newport News, a serious student of statistics whose sense of the ridiculous led to his lighthearted discovery of the women’s hemlines indicator of stock prices.

Paul Macrae Montgomery, 72, who died this weekend, was the kind of forthright speaker who could tell a high-powered international meeting financial analysts that their Holy Grail of predicting interest rates was logically impossible given the tools and theories they clung to. He was the kind of optimistic thinker who would then add that if they were willing to keep an ear out for the signals of their reptile and emotional brains, analyzing markets need not necessarily drive them mad.

September 11, 2014

Taking Vitamins

Filed under: Health — Bob @ 5:20 pm

Here’s another piece arguing that taking most vitamins and supplements basically is a waste of money. It argues that the studies that favor taking specific vitamins fails to distinguish the effects of the vitamins from overall healthy lifestyles or other factors.

Using this approach, researchers have found that higher concentrations of vitamin D are linked to less cardiovascular disease, lower overall mortality, less weight gain, less diabetes, less likelihood of getting infectious diseases, less multiple sclerosis, fewer mood disorders, better cognitive function — basically, every outcome under the sun. Based on these studies, vitamin D is pretty much the philosopher’s stone.

A bit less magical, vitamin E has also been credited (again, in observational studies) with everything from better pregnancy outcomes to lower mortality. In the most striking result, a large study published in the early 1990s found a 40 percent reduction in mortality risk from taking vitamin E supplements for two years. This effect is enormous.

Being a Top Investor

Filed under: Asset Allocation,Investing — Bob @ 12:20 pm

What makes a top-performing investor? Here’s an interesting anecdote that indicates Fidelity did a study of its customer accounts and found the best performers were the accounts of people who didn’t make any changes because they forgot they had Fidelity accounts.

But O’Shaughnessy relays one anecdote from an employee who recently joined his firm that really makes one’s head spin.

O’Shaughnessy: “Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was…”

Ritholtz: “They were dead.”

O’Shaughnessy: “…No, that’s close though! They were the accounts of people who forgot they had an account at Fidelity.”

There are numerous studies that explain why this happens. And they almost always come down to the fact that our minds work against us.

The Dangers of Narratives

Filed under: Investing — Bob @ 9:45 am

Here’s a piece that’s both a Sept. 11, 2001, remembrance and a caution against narratives and storytelling. I frequently caution investors not to pay attention to investment strategies based on stories or narratives. They’re very alluring and comforting. They seem to put all the pieces of the puzzle together. But they’re also misleading. To make the narrative compelling, some facts have to be ignored or distorted. The investment world simply isn’t easy and neat enough to fit into a narrative or story.

The best stories are simple, easily communicated, easily grasped and easily remembered. Perhaps most significantly, we inherently prefer narrative to data — often to the detriment of our understanding. To do math, neither maturity nor knowledge of human nature and experience are required. All that is required is the ability to perceive patterns, logical rules and linkages. But because of the enormous sets of random variables involved in real life, patterns, logical rules and linkages alone do not solve any actual puzzles. Correlation does not imply causation. Information may be cheap but meaning is both expensive and elusive.

As Nassim Taleb explains in The Black Swan, the narrative fallacy addresses our limited ability to look at sequences of facts without weaving an (often erroneous)explanation into them or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity often goes wrong is when it increases our impression of understanding.

September 10, 2014

Things to Worry About

Filed under: Economy — Bob @ 5:20 pm

David Rosenberg’s been fairly optimistic about the economy for a while. He recently wrote that his conviction level has declined a bit. He still sees a lot of good things happening in the U.S., but he’s worried that forces outside the U.S. economy could drag down our growth. I’d give a quote from the article, but the web site won’t let me.

An Affordable Care Act Update

Filed under: Medical Insurance — Bob @ 12:21 pm

There hasn’t been much news lately about medical insurance and the Affordable Care Act. But insurers are gearing up for the next enrollment season. They’ve submitted their plans and proposed premiums to the government, and the web sites are being prepped with the new information. Here’s a good summary of what’s been happening behind the scenes with some commentary and analysis. Headline news: The premium increases are fairly modest for medical insurance premiums. But there’s more to the story.

The new 2015 Silver baseline plan may have a lower premium than the 2014 Silver baseline plan. But that is almost always because the insurance company that held that slot in 2014, and almost always got the largest share of business, significantly increased their rates for 2015.

Then another insurance company, who didn’t write much business and likely now eager to increase market share, decreased their rates and has become the 2015 baseline plan. The second company was able to decrease their rates without much fear because the Obamacare “3Rs” reinsurance scheme virtually protects them from any material losses.

The Gap in Estate Plans

Filed under: Estate Planning — Bob @ 8:21 am

The major gap in estate plans these days is that the different generations don’t talk about financial matters, according to a new survey from UBS. All generations would be happier and better off if discussions were to occur, but in many cases neither side wants to initiate the talks.

Reluctance to communicate is driven by emotional barriers on both sides. Parents don’t think inheritance is a pressing issue and are often in denial about their mortality. They also don’t want their children to feel “entitled.” Conversely, children don’t want to appear greedy or break the family standard of not talking about money. But both sides agree; it’s up to the parents to start the conversation.

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